ON COVER Located 150 miles (241 kilometers) southeast of New Orleans in Mississippi Canyon Block 778 in a water depth of approximately 6,050 feet

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2 ON COVER Located 150 miles (241 kilometers) southeast of New Orleans in Mississippi Canyon Block 778 in a water depth of approximately 6,050 feet (1,844 meters), the Thunder Horse platform is the world's largest semisubmersible facility. British Petroleum received approval from the Minerals Management Service to debottleneck the topside production facilities to 275,000 barrels of oil and 220 million standard cubic feet of natural gas per day. As of March 20, 2009, production was approximately 260,000 barrels of oil and million standard cubic feet of natural gas per day from seven wells. The Thunder Horse Field is the largest producer in the Gulf of Mexico. (Image courtesy of BP America Inc.)

3 OCS Report MMS Deepwater Gulf of Mexico 2009: Interim Report of 2008 Highlights Authors Lesley D. Nixon Nancy K. Shepard Christy M. Bohannon Tara M. Montgomery Eric G. Kazanis Mike P. Gravois Published by U.S. Department of the Interior Minerals Management Service New Orleans Gulf of Mexico OCS Region May 2009

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5 TABLE OF CONTENTS Page FIGURES...v TABLES...vii ABBREVIATIONS AND ACRONYMS...ix PREFACE...xi INTRODUCTION...1 WHAT S NEW...3 Exploration Activity...3 Production Startups Area and 181 South Area Acreage Available for the First Time in 20 Years...5 New 5-Year OCS Oil and Gas Leasing Program Initiated...7 Royalty and Rental Rate Increases...7 Change in Administrative Boundaries (Sale Boundaries)...7 BACKGROUND...9 Definitions...9 Expanding Frontier...10 Ultra-Deepwater Drilling and Discoveries ( 5,000 ft or 1,524 m)...10 Challenges and Rewards...13 LEASING AND ENVIRONMENT Year OCS Oil and Gas Leasing Program...17 Water-Depth Intervals...18 Leasing Activity...18 Central Lease Sale Eastern Lease Sale Western Lease Sale Central Lease Sale Leasing Trends...22 Future Lease Activity...23 Grid Programmatic Environmental Assessments...23 Recent Environmental Studies by MMS...28 Deepwater Currents...28 Sperm Whale Seismic Study...29 Chemosynthetic Communities...29 Deepwater Coral...30 Deepwater Shipwreck...31 Subsea Processing in Deepwater Environments...31 iii

6 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS DRILLING AND DEVELOPMENT...33 Hurricane Safety-related Notices to Lessees and Operators...33 Plans...34 Rigs...36 Drilling Activity...37 Development Systems...40 Industry Involvement and New Technologies...40 Perdido...42 Cascade and Chinook...42 Phoenix...44 Thunder Horse...45 RESERVES AND PRODUCTION...47 Reserves and Discoveries...47 Production Trends...47 Production Rates...51 HIGHLIGHTS AND CONCLUSIONS...55 Highlights...55 Conclusions...57 America s Offshore Energy Future...58 CONTRIBUTING PERSONNEL...59 REFERENCES...61 APPENDICES...65 Appendix A. Development Systems of Productive Deepwater Projects...65 Appendix B. Average Annual GOM Oil and Gas Production...71 iv

7 FIGURES Page Figure 1. Geographic distribution of 2008 discoveries by water depth Figure 2. Map of the portion of the 181 Area offered in Sale 224 and the portion of the 181 South Area offered in Sale Figure 3. Deepwater discoveries by year Figure 4. Estimated volume of proved deepwater fields Figure 5. Current, potential, and future hub facilities Figure 6. Deepwater royalty-relief zones with planning areas and selected bathymetry Figure 7. Active leases by water depth Figure 8. Number of leases issued each year subdivided by DWRRA water-depth categories Figure 9. Number of leases bid on for each deepwater interval Figure 10. Anticipated lease expirations from 2009 to Figure 11. Grid PEA status Figure 12. Deepwater EP s, DOCD s, and DWOP s received since Figure 13. Maximum number of platform rigs and MODU s operating in the deepwater Gulf of Mexico in any one year Figure 14. Approximate number of deepwater MODU s contracted to the Gulf of Mexico and worldwide subdivided according to their maximum water-depth capabilities Figure 15. All deepwater wells drilled subdivided by water depth Figure 16. Deepwater exploratory wells drilled subdivided by water depth Figure 17. Deepwater development wells drilled subdivided by water depth Figure 18. Location map of currently installed deepwater structures by type Figure 19. The BW Pioneer, the double-hulled tanker that will serve as the FPSO for the Cascade and Chinook developments Figure 20. The Helix Producer I, a conventional ship-shape floating production unit Figure 21. Disconnectable transfer system to attach the Helix Producer I to the subsea wells in the Phoenix Field Figure 22. Number and volume of deepwater discoveries v

8 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 23. Deepwater projects that began production in 2007 and 2008 and those expected to begin production by yearend Figure 24a. Estimated U.S. oil production in Figure 24b. Estimated U.S. gas production in Figure 25a. Comparison of average annual shallow- and deepwater oil production Figure 25b. Comparison of average annual shallow- and deepwater gas production Figure 26a. Maximum historic oil well production rates Figure 26b. Maximum historic gas well production rates Figure 27. Average lag time from leasing to first production for producing deepwater fields vi

9 TABLES Page Table 1. Deepwater Discoveries for Table 2. Industry Comments on 2008 Deepwater Discoveries... 3 Table 3. Discoveries in Water Depths Greater than 5,000 ft (1,524 m) Table 4. Number of Active Leases by Water-Depth Interval Table 5. Grid PEA Status within the Central and Western Planning Areas Table 6. Top 20 Producing Blocks for the Years vii

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11 ABBREVIATIONS AND ACRONYMS 2D two dimensional GC 3D three dimensional GGS AC Alaminos Canyon GOM APD Application for Permit to Drill IAD API American Petroleum Institute KC APM Application for Permit to Modify km AT Atwater Valley km 2 AVO amplitude variation with offset LL bbl barrels m BBOE billion barrels of oil equivalent MC Bcf billion cubic feet Mcf Bcf/d billion cubic feet per day mi BOE barrels of oil equivalent mi 2 BOE/d barrels of oil equivalent per day MMbbl bo/d barrels of oil per day MMcf/d bw/d barrels of water per day MMS cf/d cubic feet per day MODU CID Conservation Information Document MTLP N cm/s centimeters per second NEPA CPA Central Planning Area CSA Continental Shelf Associates NOAA CZM coastal zone management DC DeSoto Canyon NTL º C degrees Celsius NW º F degrees Fahrenheit OCS DOCD Development Operations Coordination Document OCSLA DTS disconnectable transfer system OSTS DVA direct vertical access DWOP Deep Water Operations Plan PEA DWRRA Deep Water Royalty Relief Act EA environmental assessment psi EB East Breaks RP EIS environmental impact statement SAIC EP Exploration Plan SE ESP electric submersible pump SWSS EW Ewing Bank TGS FPS floating production system FPSO floating production, storage, and offloading TLP U.S. FPU floating production unit USDOI FR Federal Register ft feet USGS ft/s feet per second WP GB Garden Banks WR Green Canyon Global Geo Services ASA Gulf of Mexico industry-announced discovery Keathley Canyon kilometers square kilometers Lloyd Ridge meters Mississippi Canyon thousand cubic feet miles square miles million barrels million cubic feet per day Minerals Management Service mobile offshore drilling unit mini-tension-leg platform north National Environmental Policy Act National Oceanic and Atmospheric Administration Notice to Lessees and Operators northwest Outer Continental Shelf Outer Continental Shelf Lands Act Office of Structural and Technical Support programmatic environmental assessment pounds per square inch recommended practice Science Applications International Corporation southeast Sperm Whale Seismic Study TGS-NOPEC Geophysical Company ASA tension-leg platform United States United States Department of the Interior United States Geological Survey well protector Walker Ridge ix

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13 PREFACE This is the ninth publication that the Minerals Management Service has released chronicling deepwater exploration, development, and production activities in the Gulf of Mexico. For this report, deep water is considered to be water depths of 1,000 feet (305 meters) or greater. Leasing activity in the deepwater Gulf remains strong. Central Sale 206, held on March 19, 2008, attracted approximately $3.7 billion in high bids the most since Federal offshore leasing began in The Minerals Management Service received 1,057 bids from 85 companies on 615 blocks, of which 603 were ultimately awarded. Sixty-nine percent of all blocks receiving bids were in 1,000 feet (305 meters) of water or greater. Occurring on the same day as Sale 206, Eastern Sale 224 garnered over $65 million in high bids, attracting 58 bids from six companies on 36 blocks, of which all were ultimately awarded. All acreage offered was in water depths greater than 2,625 feet (800 meters). Western Sale 207, held on August 20, 2008, attracted approximately $487 million in high bids. The Minerals Management Service received 423 bids from 53 companies on 319 blocks, of which 313 were ultimately awarded. Seventy-eight percent of all blocks receiving bids were in 1,000 feet (305 meters) of water or greater. Central Sale 208, held on March 18, 2009, attracted approximately $703 million in high bids. The Minerals Management Service received 476 bids from 70 companies on 348 blocks. Seventy-two percent of all blocks receiving bids were in 1,000 feet (305 meters) of water or greater. There were 15 industry-announced discoveries in 2008, almost double the number of discoveries in Deep water has continued to be a very important part of the total Gulf production, providing approximately 70 percent of the oil and 36 percent of the gas in the region. At the end of 2008, there were 141 producing projects in the deepwater Gulf, up from 130 at the end of The 20 highest producing blocks in the Gulf continue to be located in deep water. Seven deepwater projects, including Thunder Horse, began production last year. The Thunder Horse Field is now the largest producer in the Gulf, with production of approximately 260,000 barrels of oil per day. The first floating production, storage, and offloading facility in the U.S. Gulf, the BW Pioneer vessel, will develop the Cascade and Chinook Fields in Walker Ridge, with first oil production expected in This development project will utilize four technologies considered new to the Gulf, including free-standing hybrid risers, polyester mooring, electric submersible booster pumps, and shuttle tankers for oil export. Another first for the Gulf will be the use of a shipshape, floating production unit, the Helix Producer I vessel, for the Phoenix development in Green Canyon, with a planned production startup in A disconnectable transfer system will be used to connect the subsea wells to the Helix Producer I, also a first for the U.S. Gulf. Also scheduled to begin production in 2010 are the projects tied back to the Perdido Regional Host facility in Alaminos Canyon. The truss spar was installed in over 8,000 feet (2,438 meters) of water in August 2008 and sets a record for the deepest spar in the world. Perdido is the first application of full, host-scale subsea separation and boosting in the U.S. Gulf. The Minerals Management Service is a responsible steward of U.S. offshore resources by ensuring the receipt of fair market value for the sale of leases, encouraging conservation, evaluating and approving new technology, and regulating drilling and production. Lars Herbst Regional Director Gulf of Mexico OCS Region Minerals Management Service xi

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15 INTRODUCTION The Deepwater Gulf of Mexico 2009 report is a condensed and updated edition of the biennial deepwater report published by the Minerals Management Service (MMS) (Richardson et al., 2008). The 2009 report provides an up-to-date review of activities in the deepwater U.S. Gulf of Mexico (GOM), including highlights from All statistics in this report are gleaned from data as of the end of December 2008, except production volumes and rates, which were compiled through the end of December 2007 (the most recent calendar year of complete production data available at the time of this publication). The deepwater GOM is an integral part of the Nation s oil and gas supply and one of the world s most important oil and gas provinces. Numerous highlights this past year include (1) the record-setting Lease Sale 206, which attracted $3.7 billion in high bids the most since Federal offshore leasing began in 1954, (2) exploratory drilling that resulted in 15 new discoveries, and (3) the number of producing projects in the deepwater GOM at the end of 2008 was 141, up from 130 at the end of Detailed statistics and discussions of these and other highlights are presented in this report, which is divided into six sections. The What s New section includes: Discoveries in 2008 Production startups New acreage available for the first time in 20 years New 5-Year OCS Oil and Gas Leasing Program Increase in royalty and rental rates Sale boundary changes The Background section includes: Definition of key terms Ultra-deepwater drilling and discoveries Deepwater discoveries by year Proved field sizes Hub facilities The Leasing and Environment section includes: Information on the 5-Year OCS Oil and Gas Leasing Program Leasing activities and trends Sales 206, 224, 207, and 208 statistics Future leasing activities, including anticipated lease expirations Grid programmatic environmental assessments Recent MMS environmental studies 1

16 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS The Drilling and Development section includes: Hurricane safety-related Notices to Lessees and Operators (NTL s) Information on operational plans Statistics on GOM and worldwide rig availability Deepwater drilling activities Deepwater development systems New GOM technologies and deepwater developments The Reserves and Production section includes: Historical deepwater reserve additions Deepwater projects online between 2007 and 2013 Information on the top 20 producing blocks Shallow-water and deepwater production comparison High deepwater production rates The Highlights and Conclusions section includes: Highlights from 2008 and early 2009 Lease acquisition to production lag times 2

17 WHAT S NEW EXPLORATION ACTIVITY Exploratory drilling in the deepwater GOM has found more than 6.6 billion barrels of oil equivalent (BBOE) since 2002, more than double the amount reported in the 2005 Deepwater Interim Report (French et al., 2005). Exploration efforts in 2008 have resulted in 15 new deepwater discoveries (Table 1). Industry comments on many of these discoveries are shown in Table 2. Five of these discoveries were drilled in water depths greater than 5,000 feet (ft) [1,524 meters (m)] (Figure 1). Table 1. Deepwater Discoveries for 2008 Prospect Name Area/Block Water Depth (ft) Operator Diamond LL 370 9,975 Murphy Hal WR 848 7,657 Statoil/ExxonMobil Tortuga MC 561 6,302 Noble Energy Freedom MC 948 6,095 British Petroleum/Noble Energy Dalmatian DC 48 5,876 Murphy Kodiak MC 771 4,986 British Petroleum (unnamed) GC 448 3,266 LLOG Gladden MC 800 3,116 Newfield Exploration (unnamed) MC 503 3,099 LLOG Geauxpher GB 462 2,820 Mariner Energy Anduin West MC 754 2,696 Newfield Exploration Sargent GB 339 2,180 Deep Gulf Energy (unnamed) MC 72 2,013 LLOG (unnamed) VK 821 1,030 Walter Oil & Gas Shaft GC 141 1,003 LLOG Table 2. Industry Comments on 2008 Deepwater Discoveries Prospect Name Industry Comments Diamond natural gas play was found for sufficient subsea tieback Hal subsalt, four-way closure in the Paleogene fold belt play Tortuga encountered natural gas in a secondary objective Freedom greater than 550 net ft of hydrocarbon-bearing sands Dalmatian 120 ft measured depth of net high quality natural gas pay Kodiak about 500 net ft of hydrocarbon-bearing sands in Middle & Lower Miocene reservoirs unnamed (GC 448) over 85 ft of oil-bearing sand Gladden 80 ft of net oil pay unnamed (MC 503) over 380 ft of gas and oil pay zones in four separate reservoir packages Geauxpher gross proved and probable reserves of approximately 100 Bcf natural gas equivalent Anduin West 30 ft of net gas and condensate pay Sargent 45 ft of net gas pay unnamed (MC 72) over 100 ft of gross gas-filled sand unnamed (VK 821) will be a one well subsea tieback to infrastructure on an adjacent block 3

18 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 1. Geographic distribution of 2008 discoveries by water depth. 4

19 W HAT S N EW PRODUCTION STARTUPS Numerous large deepwater projects have transitioned from an exploratory and appraisal phase into a production phase. For example, in 2007, Atlantis in Green Canyon Block 787 [semisubmersible capacity of 200,000 barrels of oil per day (bo/d) and 180 million cubic feet per day (MMcf/d)] and the fields tied into the Independence Hub production facility in Mississippi Canyon Block 920 [floating production unit (FPU) capacity of 1 billion cubic feet per day (Bcf/d)] came online. This trend continued into 2008 and continues for the near future, with production startups at: Thunder Horse in Mississippi Canyon Block 778 (semisubmersible capacity of 275,000 bo/d and 220 MMcf/d) in 2008 Tahiti in Green Canyon Block 640 (truss spar capacity of 125,000 bo/d and 70 MMcf/d) in 2009 Thunder Hawk in Mississippi Canyon Block 734 (semisubmersible capacity of 60,000 bo/d and 70 MMcf/d) in 2009 Thunder Horse North in Mississippi Canyon Block 776 (tied back to the Thunder Horse facility) in 2009 Cascade and Chinook in Walker Ridge Blocks 206 and 469, respectively, [floating production, storage, and offloading (FPSO) system oil storage capacity of 600,000 barrels, oil processing capacity of 80,000 bo/d, and gas export capacity of 16 MMcf/d] in 2010 Phoenix in Green Canyon Block 237 (FPU maximum capacity of 45,000 bo/d and 72 MMcf/d) in 2010 Great White, Silvertip, and Tobago tied into the Perdido Regional Host facility in Alaminos Canyon Block 857 [truss spar capacity of 100,000 bo/d and 200,000 cubic feet per day (cf/d)] in 2010 These projects, among others, represent commitments by industry to overcome the challenges of drilling and development in the deepwater environment of the GOM. 181 AREA AND 181 SOUTH AREA ACREAGE AVAILABLE FOR THE FIRST TIME IN 20 YEARS Acreage for lease in Sale 224 (held on March 19, 2008) and Sale 208 (held on March 18, 2009) included areas that have been off-limits to exploration until the most recent 5-Year Leasing Program ( ) implemented by MMS. The Gulf of Mexico Energy Security Act of 2006 mandated that these areas be offered for lease and that the States of Alabama, Louisiana, Mississippi, and Texas share a portion of all qualified revenues from leases in these new areas. Eastern Sale 224 offered approximately 0.5 million acres from what is known as the 181 Area, and Central Sale 208 offered approximately 4.2 million acres from what is known as the 181 South Area (Figure 2). These two sales presented oil companies the first opportunity to lease blocks in these areas since

20 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 2. Map of the portion of the 181 Area offered in Sale 224 and the portion of the 181 South Area offered in Sale 208. Also shown are two recent seismic surveys in these areas. Two recent seismic datasets are available over the 181 and 181 South Areas (Figure 2). TGS-NOPEC Geophysical Company ASA (TGS) and Global Geo Services ASA (GGS) entered into a joint venture on a 28,000-kilometer (km) [17,398-mile (mi)] multi-client 2D survey, known as Phase 51. The project was supported by pre-funding from several oil companies. TGS and GGS combined acquisition resources to complete the recording of the survey in February Both pre-stack time and depth migration processing were performed by GGS-Spectrum. TGS is responsible for marketing and sales of the resulting products. TGS also recently commenced a multi-client 3D survey over the northern 181 South Area. The survey, known as Orion 3D, will cover approximately 175 Outer Continental Shelf (OCS) blocks (4,100 km 2 or 1,583 mi 2 ) in the Lloyd Ridge area. The exploration potential for this area includes seismic attribute plays as well as deeper structural opportunities. TGS acquired the Orion 3D survey utilizing the Fugro Geo Barents seismic vessel. The data were recorded with 9,000-m (29,528-ft) streamer offsets and were processed with both pre-stack time and pre-stack depth imaging. In addition to the full offset migrations, partial offset stacks were generated for evaluating amplitude variation with offset (AVO). The Orion 3D survey was supported by industry funding. The Phase 51 2D and Orion 3D programs are located in close proximity to the Independence Hub production facility operated by several independent oil companies. This large facility produces gas from a number of discoveries that have been made in the area including Spiderman, Cheyenne, Jubilee, and Vortex. 6

21 W HAT S N EW NEW 5-YEAR OCS OIL AND GAS LEASING PROGRAM INITIATED Lease sales are scheduled as part of the 5-Year Program, officially titled Outer Continental Shelf Oil and Gas Leasing Program. The current program covers the time period from July 2007 through June Developing a 5-Year Program is a multi-step process incorporating public comment and consultation with states and other Federal agencies. This process usually takes 2 years to complete. In August 2008, the Interior Department issued a Call for Information and Nominations, the first step in a multi-step process, to begin a new 5-Year Program covering the time period from July 2010 through June This step included a 45-day comment period, which was extended by 3 days and closed September 18, The second step in the process, the issuance of a draft proposed program, took place January 15, The draft proposed program seeks public comment on all aspects of the new program for including energy development and economic and environmental issues in the OCS areas. For the draft proposed program, MMS proposes 31 OCS lease sales in all or some portion of 12 of the 26 planning areas 4 areas off Alaska, 3 areas off the Atlantic Coast, 3 areas in the GOM, and 2 areas off the Pacific Coast. The draft proposed program is just a starting place designed to encourage discussions about the OCS areas of greatest interest and potential. Any new areas that are included in the final program will not be available for leasing until the 5-Year Program has been completed and approved. No area can be leased without being included in the then current approved 5-Year Program. In February 2009, the Interior Secretary extended the comment period for the draft proposed program for an additional 180 days to September 21, 2009, in order to provide additional time for input from states, stakeholders, and affected communities. The Secretary also requested that MMS and the United States Geological Survey (USGS) produce a report on the offshore resources and potential impacts by the end of March Four regional meetings are scheduled, one each for Alaska, the Atlantic Coast, the Gulf Coast, and the Pacific Coast, following publication of the report. More information can be found on MMS s Web site at ROYALTY AND RENTAL RATE INCREASES Lease Sales 206 and 224, held in March 2008, included an increase in the royalty rate for deepwater leases to percent from the 16.7 percent rate. The MMS has increased the rental rates for leases issued in Sale 208, held in March The increase in the base rental rate raises rates from $6.25 to $7.00 per acre in water depths of less than 200 m (656 ft) and from $9.50 to $11.00 per acre in 200 m (656 ft) or deeper. For the first time, rental rates will be escalated for all leases with initial terms of more than 5 years. Rental rates will also be escalated for leases with an approved extension of the initial lease period. Amounts for each increase and details are listed in the Final Notice of Sale (Federal Register, 2009). CHANGE IN ADMINISTRATIVE BOUNDARIES (SALE BOUNDARIES) On January 3, 2006, MMS published a notice in the Federal Register (2006; 71 FR 1) announcing the setting of Federal OCS offshore administrative boundaries beyond State submerged lands for planning, coordination, and administrative purposes. More information on these administrative boundary changes can be found on MMS s Web site at 7

22 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS The planning area boundary changes took effect with the Year Program on July 1, Since then, minor modifications have been implemented to avoid splitting some blocks. These modifications resulted in boundaries that have a stair-stepped appearance. These new planning area boundaries will appear on all pertinent maps in this report. 8

23 BACKGROUND DEFINITIONS For purposes of this report, deep water is defined as water depths greater than or equal to 1,000 ft (305 m), and ultra-deep water is defined as water depths greater than or equal to 5,000 ft (1,524 m). Leasing and royalty-relief data used are expressed in meters to be consistent with regulatory requirements. All other data are expressed in feet, corresponding to operational considerations. A few other definitions are useful at this point: Proved Reserves are those quantities of hydrocarbons that can be estimated with reasonable certainty to be commercially recoverable from known reservoirs. These reserves have been drilled and evaluated and are generally in a producing or soon-to-be producing field. Unproved Reserves can be estimated with some certainty (drilled and evaluated) to be potentially recoverable, but there is as yet no commitment to develop the field. Known Resources in this report refer to discovered resources (hydrocarbons whose location and quantity are known or estimated from specific geologic evidence) that have less geologic certainty and a lower probability of production than the Unproved Reserves category. Industry-Announced Discoveries refer to oil and gas accumulations that were announced by a company or otherwise listed in industry publications. These discoveries may or may not have been evaluated by MMS, and the reliability of estimates can vary widely. Field is defined as an area consisting of a single reservoir or multiple reservoirs grouped on, or related to, the same general geologic structural feature and/or stratigraphic trapping condition. There may be two or more reservoirs in a field that are separated vertically by intervening impervious strata or laterally by local geologic barriers or both. More detailed definitions may be found in the annual Estimated Oil and Gas Reserves, Gulf of Mexico Outer Continental Shelf, December 31, 2004 report (Crawford et al., 2008). This report refers to developments both as fields (as defined above) and by operatordesignated project names. It is important to note that the total number of fields, as defined by MMS criteria, and the total number of operator-designated projects may not be the same. A field name is assigned to a lease or a group of leases by MMS so that oil and natural gas resources, reserves, and production can be allocated on the basis of the unique geologic feature that contains the hydrocarbon accumulation(s). The field s identifying block number corresponds to the first lease qualified by MMS or the block where the primary structure is located. Therefore, more than one operator-designated project may be included in a single MMS-designated field. Note that the term oil refers to both oil and condensate throughout this report and gas includes both associated and non-associated gas. 9

24 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS EXPANDING FRONTIER When the original version of this report (Cranswick and Regg, 1997) was published in February 1997, a new era for the GOM had just begun with intense interest in the oil and gas potential of the deepwater areas. At that time there were favorable economics, recent deepwater discoveries, and significant leasing spurred on by the Deep Water Royalty Relief Act (DWRRA; 43 U.S.C. 1337). Historically, deepwater production began in 1979 with Shell s Cognac Field, but it took another 5 years before the next deepwater field (ExxonMobil s Lena Field) came online. Both developments relied on extending the limits of platform technology used to develop the GOM shallow-water areas. Since then, deepwater exploration and production technology has tremendously advanced. In February 1997, there were 17 producing deepwater projects, up from only 6 at the end of Since then, industry has been rapidly advancing into deep water, and many of the anticipated fields have begun production. At the end of 2008, there were 141 producing projects in the deepwater GOM, up from 130 at the end of 2007 (Richardson et al., 2008). Over the last 15 or so years, leasing, drilling, and production moved steadily into deeper waters. There are approximately 7,310 active leases in the U.S. GOM, 58 percent of which are in deep water. (Note that lease statuses may change daily, so the current number of active leases is an approximation.) Contrast this to approximately 5,600 active GOM leases in 1992, only 27 percent of which were in deep water. There was a maximum of 31 rigs drilling in deep water in 2008, compared with only 3 rigs in Likewise, deepwater oil production rose about 786 percent and deepwater gas production increased about 1,067 percent from 1992 to Production from seven deepwater fields began in 2008, including Thunder Horse, the largest daily producer in the GOM. Appendix A provides locations and additional information for these fields and projects. ULTRA-DEEPWATER DRILLING AND DISCOVERIES ( 5,000 FT OR 1,524 M) In 1986, the first discovery in the GOM in water depths greater than 5,000 ft (1,524 m) occurred with Mensa. Since that time, there have been 64 additional discoveries in the ultra-deep provinces of the Gulf (Table 3). The production from 13 of these discoveries is associated with the Independence Hub natural gas processing facility. Another 15 of the discoveries are associated with the Lower Tertiary trend. In 2007, MMS reported a record number of 15 rigs drilling for oil and gas in water depths of 5,000 ft (1,524 m) or more in the GOM. Although this record has not yet been surpassed, MMS expects increased drilling activities in ultra-deep water, with 15 newbuild mobile offshore drilling units (MODU s) contracted for delivery to the GOM in 2009 through The MMS expects 2 new drillships and 6 new semisubmersible drilling rigs in 2009, 5 new drillships and 1 semisubmersible drilling rig in 2010, and 1 new semisubmersible drilling rig in There are also 4 semisubmersible rigs that are currently being upgraded to drill in ultra-deep water that are contracted for delivery to the GOM in 2009 and The newbuild Stena DrillMAX I drillship and the Seadrill West Sirius semisubmersible drilling rig were delivered to the GOM in All of the newbuild MODU s are being built with dynamic positioning systems and will not have to be moored to the seafloor. These newbuild MODU s will be capable of drilling in water depths from 7,500 to 12,000 ft (2,286 to 3,658 m) and will be capable of drilling wells from 30,000 to 40,000 ft (9,144 to 12,192 m) below the seafloor. There are several drilling contractors that 10

25 B ACKGROUND have MODU s in construction for delivery in 2010 and 2011 that are not yet contracted with operators, and some of these MODU s are expected to operate in the GOM under future contracts. Table 3. Discoveries in Water Depths Greater than 5,000 ft (1,524 m) Project/Prospect Area/Block Water Depth (ft) 1 Discovery Year Constitution GC 680 5, GC767 GC 767 5, Rigel MC 252 5, Ticonderoga GC 768 5, Big Foot WR 29 5, King MC 84 5, Mensa MC 731 5, Red Hawk GB 877 5, Goldfinger MC 771 5, Horn Mountain MC 127 5, Devil s Tower MC 773 5, Thunder Horse North MC 776 5, Thunder Bird MC 819 5, Thunder Hawk MC 734 5, Kaskida 3 KC 292 5, Kepler MC 383 5, La Femme MC 427 5, Seventeen Hands MC 299 5, Dalmatian DC 48 5, Thunder Horse MC 778 6, Freedom MC 948 6, Thunder Ridge MC 737 6, Ariel MC 429 6, Neptune (AT) AT 575 6, Tortuga MC 561 6, Isabela MC 562 6, King's Peak DC 133 6, Anstey MC 607 6, Atlantis GC 743 6, Bass Lite AT 426 6, Fourier MC 522 6, Blind Faith MC 696 6, Jack 3 WR 759 6,

26 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Table 3. Discoveries in Water Depths Greater than 5,000 ft (1,524 m) (continued) Project/Prospect Area/Block Water Depth (ft) 1 Discovery Year St. Malo 3 WR 678 6, Aconcagua MC 305 7, Mission Deep GC 955 7, Julia 3 WR 627 7, Camden Hills MC 348 7, Shiloh DC 269 7, Coulomb MC 657 7, BAHA 3 AC 600 7, Hal 3 WR 848 7, Gotcha 3 AC 856 7, Callisto MC 876 7, San Jacinto 2 DC 618 7, Q 2 MC 961 7, Merganser 2 AT 37 7, Spiderman 2 DC 621 8, Great White 3 AC 857 8, Cascade 3 WR 206 8, Vortex 2 AT 261 8, Mondo NW Extension 2 LL 1 8, Mondo Northwest 2 LL 2 8, Jubilee Extension 2 LL 309 8, Jubilee 2 AT 349 8, Atlas NW 2 LL 5 8, Chinook 3 WR 469 8, Atlas 2 LL 50 8, Cheyenne 2 LL 399 8, Tiger 3 AC 818 9, Silvertip 3 AC 815 9, Stones 3 WR 508 9, Tobago 3 AC 859 9, Trident 3 AC 903 9, Diamond LL 370 9, Water depths are approximate and may be the location of a completed well, or an average of completed wells, or the location of the discovery well in the block. 2 Projects associated with the Independence Hub natural gas processing facility. 3 Projects associated with the Lower Tertiary trend. 12

27 CHALLENGES AND REWARDS B ACKGROUND Significant challenges exist in deep water in addition to environmental considerations. Deepwater operations are very expensive and often require significant amounts of time between initial exploration and first production. Despite these challenges, operators often reap great rewards. Figure 3 shows the history of discoveries in the deepwater GOM. There was a shift toward deeper water over time, and the number of deepwater discoveries continues at a steady pace. In addition to the significant number of deepwater discoveries, the flow rates of deepwater wells and the field sizes of deepwater discoveries are often quite large. These factors are critical to the economic success of deepwater development. Figure 4 illustrates the estimated sizes and locations of 127 proved deepwater fields. In addition to their large sizes, the fields have a wide geographic distribution and range in geologic age from Pleistocene through Paleocene. Figure 5 illustrates existing and potential hubs for deepwater production. For purposes of this report, deepwater hubs are defined as surface structures that host production from one or more subsea projects. These hubs represent the first location where subsea production comes to the surface, and the hubs are the connection point to the existing pipeline infrastructure. Note that potential hubs are moving into deeper waters, expanding the infrastructure and facilitating additional development in the ultra-deepwater frontier. 13

28 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 3. Deepwater discoveries by year. 14

29 B ACKGROUND 15 Figure 4. Estimated volume of proved deepwater fields.

30 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 5. Current, potential, and future hub facilities. 16

31 LEASING AND ENVIRONMENT 5-YEAR OCS OIL AND GAS LEASING PROGRAM Section 18 of the OCS Lands Act (OCSLA) requires the Secretary of the Interior to prepare and maintain a 5-Year Program. The program reflects a proper balance among the potential for the discovery of oil and natural gas, the potential for environmental damage, and the potential for adverse effects on the coastal zone. The 5-Year Program also must provide for the receipt of fair market value by the Federal Government for land leased and rights conveyed. When approved, the leasing program consists of scheduled lease sales for a 5-year period, along with policies pertaining to the size and location of sales and the receipt of fair market value. The purpose of a schedule is to increase the predictability of sales in order to facilitate planning by industry, affected states, and the general public. The schedule indicates the timing and location of sales and shows the presale steps in the process that lead to a competitive sealed bid auction for a specific OCS area. To facilitate the scheduling of and preparation for sales in the 5-Year Program, the OCS is divided into administrative geographical units called planning areas. In preparing a new 5-Year Program, the Secretary solicits comments from coastal State Governors and localities, tribal governments, the public, the oil and natural gas industry, environmental groups, affected Federal agencies, and Congress. The MMS requests comments at the start of the process of developing a new program and following the issuance of each of the first two versions: (1) the draft proposed program with a 60-day comment period; and (2) the proposed program with a 90-day comment period. The third and last version, the proposed final program, is prepared with a 60-day notification period following submission to the President and Congress. After 60 days, if Congress does not object, the Secretary may approve the program. In addition to the steps required by Section 18 of the OCSLA, the Secretary must comply with the requirements of the National Environmental Policy Act (NEPA). Additional scoping may occur and an environmental impact statement (EIS) on the 5-Year Program is prepared. During the comment period on the draft EIS, public hearings are held in various coastal locations around the Nation. After the receipt of comments, a final EIS is prepared. A record of decision that formalizes the alternatives that were selected from the final EIS is prepared. Each lease sale proposed in the program s schedule must also undergo a NEPA evaluation and presale coordination steps required by Section 19 of the OCSLA. An environmental assessment that is specific to the individual lease sale is usually prepared. These documents examine new information and changes that have occurred since the final EIS was prepared. Consultation is conducted with the states during the process, and consistency with each affected state s Coastal Zone Management (CZM) program is determined before the lease offering transpires. The listing below shows the major sequential steps in the process after adoption of a 5-Year Program. Call for Information and Nominations and Notice of Intent to Prepare an EIS Area identification Draft EIS 17

32 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Public hearings Final EIS and CZM consistency determination Record of decision Sale-specific NEPA evaluation Proposed Notice of Sale Governor s comments Final Notice of Sale Sale Decision to accept or reject bids Issuance of leases The entire 5-Year Program process takes approximately 2 years to complete. The lease sale schedule is reviewed annually after its approval. A more in-depth discussion of the leasing process is provided in MMS s document, Leasing Oil and Gas Resources: Outer Continental Shelf. The document is available through MMS s Web site at The MMS is currently operating under its proposed OCS Oil and Gas Leasing Program for This 5-Year Program proposes 12 oil and gas lease sales in the GOM 5 sales in the Western Planning Area, 6 sales in the Central Planning Area, and 1 sale in the Eastern Planning Area. Detailed schedule information is available from MMS s Web site at More information on the 5-Year Program may be gleaned from MMS s Web site at year/whatis5yearprogram.htm. WATER-DEPTH INTERVALS The Gulf of Mexico OCS is divided into three sectors the Western, Central, and Eastern Planning Areas (Figure 6). Additionally, many of the data presented in this report are subdivided according to water depth. These divisions (1,000, 1,500, 5,000, and 7,500 ft) are also illustrated in Figure 6, along with the deepwater royalty-relief zones (400, 800, 1,600, and 2,000 m) mandated by the Energy Policy Act of Not all leases within a colored area are eligible for royalty relief because of the differing vintage of leases included within the area. LEASING ACTIVITY Figure 7 depicts all active leases in the GOM at the end of calendar year The pie chart inset in this figure highlights the relative percentage of active leases in each operational water-depth category used in this report. Note that approximately 57 percent of the leased blocks are located in water depths greater than 1,000 ft (305 m), up from 54 percent in The limited number of active leases in the Eastern Planning Area is related to leasing restrictions. The approximate number of active leases for certain waterdepth ranges is shown in Table 4. 18

33 L EASING AND E NVIRONMENT 19 Figure 6. Deepwater royalty-relief zones with planning areas and selected bathymetry.

34 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 7. Active leases by water depth. 20

35 L EASING AND E NVIRONMENT Table 4. Number of Active Leases by Water-Depth Interval Number of Water Depth Active Leases ft m 3,096 <1,000 < ,000-1, ,066 1,500-4, ,524 1,398 5,000-7,499 1,525-2, >7,500 >2,286 Central Lease Sale 206 Central Sale 206 was held on March 19, This sale attracted $3,677,688,245 in high bids the most since Federal offshore leasing began in The MMS received 1,057 bids from 85 companies on 615 blocks. The sum of all bids for this sale was $5,740,047,263. Sale 206 ultimately resulted in the award of 603 leases. The MMS rejected high bids totaling $6,477,661 on 11 blocks as insufficient for fair market value, and one block was forfeited when the company withdrew their bid. The accepted high bids for the sale totaled $3,671,052, About 67 percent of the blocks receiving bids were located in deep water [400 m (1,312 ft) or deeper] with approximately 34 percent of the blocks bid upon in ultra-deep water more than 1,600 m (5,249 ft). The MMS considers water depths greater than 400 m (1,312 ft) and 1,600 m (5,249 ft) as deep water and ultra-deep water, respectively, for sale purposes. 1 The deepest block to receive a bid was Lloyd Ridge Block 286 in 3,076 m (10,092 ft) of water. The highest bid accepted on a block was $105,600,789 made by Anadarko E&P Company, Murphy Exploration & Production Company USA, and Samson Offshore Company for Green Canyon Block 432. Funds from the total high bids will be distributed to the general fund of the U.S. Treasury, shared with the affected States, and set aside for special uses that benefit all 50 States. Eastern Lease Sale 224 Held on the same day as Sale 206, Eastern Sale 224 attracted $64,713,213 in high bids. This sale offered 118 whole or partial unleased blocks covering 546,971 acres from what is known as the 181 Area (Figure 2). The MMS received 58 bids from six companies on 36 blocks. The sum of all bids for this sale was $72,137,645. Sale 224 ultimately resulted in the award of leases for all blocks bid upon. All of the blocks offered in this sale are located in water depths greater than 800 m (2,625 ft). The States of Alabama, Louisiana, Mississippi, and Texas will share in 37.5 percent of the high bids on these blocks, as well as all future revenues generated from this acreage. 1 The definitions of deep water and ultra-deep water used for lease sales statistics are based on the DWRRA established royalty suspension intervals. 21

36 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Western Lease Sale 207 Held on August 20, 2008, Western Sale 207 attracted $487,297,676 in high bids. The MMS received 423 bids from 53 companies on 319 blocks comprising over 1.8 million acres offshore Texas. The sum of all bids received totaled $607,134,968. Sale 207 ultimately resulted in the award of 313 leases. The MMS rejected high bids totaling $3,338,272 on six blocks as insufficient for fair market value. The accepted high bids for the sale totaled $483,959,404. Approximately 78 percent of the blocks receiving bids were in deep water [400 m (1,312 ft) or deeper], and approximately 21 percent of the blocks receiving bids were in ultra-deep water more than 1,600 m (5,249 ft). The deepest block bid on was Alaminos Canyon Block 783 in 2,977 m (9,767 ft) of water. The highest bid accepted on a block was $61,110,000 submitted by Statoil Gulf of Mexico LLC for Alaminos Canyon Block 380. Funds from the total high bids will be distributed to the general fund of the U.S. Treasury, shared with the affected States, and set aside for special uses that benefit all 50 States. Central Lease Sale 208 Held on March 18, 2009, Central Sale 208 attracted $703,048,523 in high bids. The MMS received 476 bids from 70 companies on 348 blocks comprising over 1.9 million acres offshore Alabama, Louisiana, and Mississippi. The sum of all bids received totaled $933,649,315. Approximately 70 percent of the blocks receiving bids were in deep water [400 m (1,312 ft) or deeper], and approximately 42 percent of the blocks receiving bids were in ultra-deep water more than 1,600 m (5,249 ft). The highest bid received on a block was $65,611,235 submitted by Shell Gulf of Mexico Inc. for Mississippi Canyon Block 721. Areas for lease in Sale 208 included approximately 4.2 million acres from what is known as the 181 South Area in the southeastern portion of the sale area (Figure 2). The 181 South Area has been off-limits to exploration for over 20 years. A total of 13 blocks received bids in this area, and the high bids for these blocks totaled $6,476,545. The States of Alabama, Louisiana, Mississippi, and Texas will share in 37.5 percent of the high bids on these blocks, as well as all future revenues generated from this acreage. LEASING TRENDS Prior to the mid-1990 s, leasing activities in the GOM were concentrated in the shallowwater blocks located on the continental shelf [water depths of approximately 200 m (656 ft)] or less. With the passage of the DWRRA in 1995, royalty-relief incentives were established for new leases on the basis of specific water-depth intervals. The water-depth categories depicted in Figure 8 reflect the divisions used in the DWRRA. This figure shows the magnitude of the DWRRA s impact on leasing activities. Significant deepwater leasing activities began in 1995 and showed remarkable increases from 1996 through 1998, especially in water depths greater than 800 m (2,625 ft), where the greatest royalty relief was available. During this time, leasing activities on shallow-water blocks diminished. After the large lease sales of 1997 and 1998, the number of leases issued in water depths greater than 800 m (2,625 ft) dropped by nearly half and remained relatively steady until increasing in 2007 and This increase is due in part to the expiration of the primary terms of leases issued in 1997 and 1998, which led to the record setting lease sales in 2007 and

37 L EASING AND E NVIRONMENT Figure 9 was derived from the data in Figure 8, but it displays the deepwater depth categories used elsewhere in this report. (Shallow-water data are excluded from Figure 9.) These data show the rapid increase in leasing activity that began in 1995 and continued through Although leasing activity plummeted in 1999, higher levels of leasing activity returned after Several factors initiated this resurgence, including high oil and gas prices and several major discoveries, such as Tahiti, Great White, and Thunder Horse. FUTURE LEASE ACTIVITY The number of leases that will be relinquished, terminated, or expired will influence activity in future lease sales. Given the fact that most companies can drill only a small percentage of their active leases, it is likely that many high-quality leases will expire without being tested. Ultimately, an untested and undeveloped lease will expire and possibly be leased again. Figure 10 shows leases that may expire from 2009 to 2020 in 2-year intervals. The data used in creating these figures assume that each lease expires at the end of its primary lease term (without a lease-term extension). Note that lease terms vary according to water depth. Primary lease terms for water-depth intervals are as follows: 5 years for blocks in less than 400 m (1,312 ft); 8 years for blocks in m (1,312-2,621 ft) (pursuant to 30 CFR , commencement of an exploratory well is required within the first 5 years of the initial 8-year term to avoid lease cancellation); and 10 years for blocks in 800 m (2,625 ft) or greater. GRID PROGRAMMATIC ENVIRONMENTAL ASSESSMENTS A biologically based grid system was developed by MMS as part of its comprehensive strategy to address deepwater issues. The grid system initially divided the Gulf into 17 areas or grids of biological similarity. Since then, 4 grids were added to the system to address the modified Sale 181 area and the new eastern boundary of the Central Planning Area in effect since 2007 for Sale 205, making a total of 21 grids for the Gulf (Figure 11). Under this system and under most circumstances, MMS will prepare a Programmatic Environmental Assessment (PEA) that characterizes and analyzes a proposed development project within context of the entire grid. Grid PEA s are comprehensive in terms of the impact-producing factors and the environmental and socioeconomic resources described and analyzed in it. Grid PEA s also address potential cumulative effects of projects proposed within the grid. Other information on publicly announced projects within the grid is discussed, as well as any potential effects expected from future developmental activities. Projects selected for the PEA s are representative of the types of development expected within the grid. For example, a good candidate for a Grid PEA would be a proposed development of a new surface structure that might serve as a hub for future development within the grid. Once a Grid PEA has been completed, it will serve as a reference document for tiering and incorporation by reference encouraged by the implementing regulations of NEPA. Future environmental evaluations may reference appropriate sections from the PEA to reduce duplication and to focus on issues and effects related to specific proposals. Table 5 shows the status of the Grid PEA s. 23

38 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS 1,200 DWRRA post-dwrra 1,000 Number of Leases Issued < 200 m m m > 800 m , Lease Sale Year Figure 8. Number of leases issued each year subdivided by DWRRA water-depth categories. 600 DWRRA post-dwrra 500 Number of Leases Bid On ,000-1,499 ft ,500-4,999 ft ,000-7,499 ft > 7,500 ft Lease Sale Year Figure 9. Number of leases bid on for each deepwater interval. 24

39 L EASING AND E NVIRONMENT Figure 10. Anticipated lease expirations from 2009 to

40 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 10. Anticipated lease expirations from 2009 to 2019 (continued). 26

41 L EASING AND E NVIRONMENT Figure 11. Grid PEA status. Table 5. Grid PEA Status within the Central and Western Planning Areas Grid Project Company Plan Area & Blocks 3 Gunnison Kerr-McGee N-7625 GB 667, 668 & Nansen Kerr-McGee N-7045 EB 602 & Perdido Shell N-8809 AC 812, 813, 814 & Magnolia Conoco N-7506 GB 783 & Phoenix Energy Resource Technology S-7156 GC 236 & Holstein British Petroleum N-7216 GC 644 & Medusa Murphy N-7269 MC 538 & Marco Polo Anadarko N-7753 GC Matterhorn TotalFinaElf N-7249 MC Thunder Horse British Petroleum N-7469 MC &

42 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS RECENT ENVIRONMENTAL STUDIES BY MMS Deepwater Currents Since 1999 industry has reported significant currents below the 3,000-ft (914-m) waterdepth level. This information led to a Safety Alert (USDOI, MMS, 2000) and subsequent studies of deep currents by MMS (Hamilton et al., 2000 and 2003). The Hamilton et al. investigations spawned additional deepwater current studies funded by MMS and were discussed in the Deepwater Gulf of Mexico 2008 Report (Richardson et al., 2008). In 2008, three new studies were made available to the public; these studies focus on currents near the Sigsbee Escarpment, in the Eastern GOM and in the northwestern GOM. In October 2008, MMS awarded a significant new contract to study currents in the deepwater GOM. Concentrating on currents near the Sigsbee Escarpment (McKone et al., 2007), Louisiana State University deployed four full-water column moorings in the GOM in February 2000 and removed the last mooring in June These moorings were designed to measure current, along with temperature, salinity, and pressure at various depths throughout the water column. The first two moorings, Deployments 1 and 2, were located on top of the Sigsbee Escarpment in approximately 2,200 m (7,218 ft) of water. These two mooring were combined to form a single time series. The last two moorings, Deployments 3 and 4, were positioned at the base of the Sigsbee Escarpment in approximately 3,000 m (9,843 ft) of water. Strongest surface currents occurred when the Loop Current or Loop Current eddies (both anticyclonic and cyclonic) flowed near or over the mooring. Of the 24 events investigated in detail, four of the events showed surface to bottom coherence in flow, which corresponded with the intensification of a Loop Current frontal eddy cyclone in close proximity to the mooring. Relatively strong bottom currents to the northeast occurred when a large warm-core anticyclonic Loop Current eddy (ring) passed south of the mooring. In May 2008, MMS announced the availability of a new study report, Deepwater Currents in the Eastern Gulf of Mexico: Observations at 25.5 N and 87 W (Inoue et al., 2008). This report presents the analysis of current data collected at 87 W., 25.5 N. in water depths of approximately 3,600 m (11,811 ft), within a narrow channel connecting the eastern and central basins of the GOM. The mooring is an entire water-column array over a nearly flat bottom. The data suggest that the GOM can be viewed as a two-layer system with the interface at m (2,297-2,625 ft) driven by the Loop Current and coinciding with the sill of the Florida Straits. The lower layer tends to have uniform currents in the vertical and speeds of centimeters per second (0.3-1 feet per second). Short events of near uniform currents from top to bottom were observed and coincided with a Loop Current extended to its maximum northward position shortly before shedding an eddy. Focusing on the northwestern GOM, in a new study report, Study of Deepwater Currents in the Northwestern Gulf of Mexico, Volume I: Executive Summary (Donohue et al., 2008a) and Volume II: Technical Report (Donohue et al., 2008b), 13 moored arrays, in water depths ranging from 500 to 3,200 m (1,640 to 10,499 ft) were used to document upper- and lower-layer current, temperature, and salinity fields in the area west of 93 W. longitude, north of the Exclusive Economic Zone, and south and east of the 200-m isobath. Moored data collection began in March 2004 and ended in June For the entire field measurement interval, satellite remote-sensing observations (altimetry, sea-surface temperature, and ocean color) were used to provide a context for the upper-layer field measurements and to characterize the associated circulation processes and patterns. The objectives of this study were (1) to collect current data to increase our deepwater database 28

43 L EASING AND E NVIRONMENT and knowledge of the deep circulation in the northwestern GOM; (2) to gather information to estimate oceanographic parameters needed to make experimental designs of full-scale, physical oceanography studies in deep water; and (3) to provide information to use in oilspill analyses, including the emerging deep spill analysis and other ongoing studies, to help evaluate exploration plans and to contribute to the preparation of NEPA documents. The MMS awarded a $5.5 million contract to Science Applications International Corporation (SAIC) to conduct a 5-year study of the GOM Loop Current in the Eastern GOM (USDOI, MMS, 2008a). Nine moorings, or anchored lines, will be placed in Gulf waters for approximately 30 months. The instruments attached to the moorings will measure current strength, water temperature, and salinity levels. Scientists from the Atlantic Oceanographic and Meteorological Lab will join SAIC to study the thermal structure of the Loop Current and hope to use this data to more accurately forecast the intensification of hurricanes entering the GOM. In addition, scientists from Princeton University, the University of Rhode Island and the University of Colorado are part of the SAIC team to carry out the state-of-the-art modeling, deep ocean circulation field observations, and the remote-sensing observations for this study. Sperm Whale Seismic Study The MMS released the results of a 6-year, $9.3 million study on sperm whales, an endangered species living in the northern GOM. The report, Sperm Whale Seismic Study in the Gulf of Mexico: Synthesis Report (Jochens et al., 2008), presents results from the Sperm Whale Seismic Study (SWSS) and gives recommendations for future study. The SWSS focused on the effects of seismic activities on sperm whales living in an area that is highly industrialized with oil and gas exploration and production activities. One finding supported by SWSS data is that northern GOM sperm whales are a distinct stock; that is, they show genetic differences from other sperm whales world-wide. Also, based on tag location data, the Gulf sperm whales showed no discernible seasonal migration. The study also did not find any horizontal avoidance of seismic sounds, meaning the whales did not alter their visible behavior on the surface when exposed to seismic sounds. Fifteen Federal and State agencies, universities, and organizations collaborated to meet the study s objectives: (1) establish baseline information about the whales biology and behavior; (2) characterize the whales habitat and how the whales use their habitat; and (3) determine possible changes in the whales behavior when they experience human-made noise. Data gathered during SWSS provide insights into daily and seasonal movements, abundance, group structure, diving and other behaviors, habitat characteristics, and response to human-made noise of sperm whales in the northern GOM. This information will help MMS evaluate whether whales prefer some locations, what effects human activities (such as seismic surveys) may have on the whales and possible mitigation measures. Chemosynthetic Communities The study report, Investigations of Chemosynthetic Communities on the Lower Continental Slope of the Gulf of Mexico: Interim Report (Brooks et al., 2008), represents the first report for a large multidisciplinary study to investigate chemosynthetic communities and deepwater, hard-bottom communities, including deepwater corals, below a depth of 1,000 m (3,281 ft) in the northern GOM. This project is a collaboration between MMS and the National Oceanic and Atmospheric Administration s (NOAA) Office of Ocean 29

44 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Exploration and Research sponsored by the National Oceanographic Partnership Program. The report compiles detailed information regarding operational procedures, stations occupied, sampling activity, and preliminary results. The information in this report is a compilation of two cruises. A 2-week reconnaissance cruise was conducted from the vessel R/V Gyre from March 11-25, 2006, including drift camera work and trawling and box core sampling. A subsequent cruise was conducted on the Wood s Hole Oceanographic Institute research vessel R/V Atlantis and the submersible Alvin from May 7 through June 2, Results reported were obtained by analysis of the sampling information and data during these cruises and immediately afterward. New chemosynthetic communities and deepwater coral communities were discovered at numerous sites. In February 2007, several study sites were mapped in great detail using the C&C Technologies Autonomous Underwater Vehicle in preparation for intensive sampling during the 2007 field season. A final report is expected in late Deepwater Coral The new study report, Lophelia Reef Megafaunal Community Structure, Biotopes, Genetics, Microbial Ecology, and Geology ( ) (Sulak et al., 2008), represents results from a multidisciplinary project conducted by the USGS supporting the needs of MMS and was complimentary and concurrent with a separate MMS study that resulted in MMS publication OCS Study by Continental Shelf Associates (CSA) (with the same title). Subject areas in the USGS report include demersal fish associated with Lophelia coral biotopes, deep-sea coral biodiversity and molecular assessment, expressed genes in Lophelia, microbial ecology of Lophelia, deepwater antipatharian sclerochronology, and hard structure geological analysis of Lophelia substrate. Field sampling cruises were performed at a total of up to five locations in the northern GOM utilizing Harbor Branch Foundation vessels and one of the Johnson Sea Link submersibles in 2004 and The R/V Tommy Munro was used for an additional sampling cruise in Both samples and scientists were exchanged between the collaborating projects by CSA/MMS and USGS. Results include the first quantitative analysis of fishes associated with Lophelia reefs in the GOM, patterns of Lophelia genetic differentiation across 290 km (180 mi) of the northern GOM, discovery of new expressed genes in Lophelia, significant differences of bacterial molecular analysis between Lophelia sites and unexpected variations in substrate mineralogy between Lophelia sites. Results of this study will be utilized to develop additional studies of hard-bottom habitats in the deep GOM and will also enhance the ability of MMS to protect sensitive deepwater biological features. On November 24, 2008, MMS announced a $3.7 million, 4-year study of deepwater corals in the GOM (USDOI, MMS, 2008b). The study contract focuses on deepwater coral communities that have formed both naturally and on oil and gas platforms and shipwrecks. The first round of the project, primarily dedicated to the exploration of shipwreck sites, took the researchers to a remarkable discovery of a copper-clad sailing schooner likely dating to the early 1800 s. Another wreck site visited, confirmed to be the Gulfoil, a tanker sunk by a German U-boat in 1942, was covered with dense thickets of the deepwater coral Lophelia. The study marks the first time coral community areas below 1,000 ft (305 m) will be investigated using remotely-operated vehicles. Study results will be used by MMS to create or modify existing regulatory policies and will help MMS protect these important habitats from the potential impacts of oil and gas exploration. The study includes 3 years of field work using research vessels and underwater vehicles provided by NOAA s Office of Ocean 30

45 L EASING AND E NVIRONMENT Exploration and Research. During the second round of field work, dedicated to exploration and sampling of both known deepwater coral habitats and new unknown hard-bottom sites, scientists are collecting numerous samples of vibrant corals for analysis. Deepwater corals in the GOM have only recently been studied, and there is little information about how coral communities are distributed and how rare they may be. This study is designed to address that shortfall. Deepwater Shipwreck The study report, Viosca Knoll Wreck: Discovery and Investigation of an Early Nineteenth-Century Wooden Sailing Vessel in 2,000 Feet of Water (Church and Warren, 2008), details the visual study of a wooden-hulled shipwreck discovered near the Petronius oil platform in the GOM. The study was performed by analyzing hours of video acquired using a remotely-operated vehicle. The identity and nationality of the vessel remains unknown, but the researchers concluded from the visual analysis of the hull remains that the ship was most likely a two-masted brig, brigantine, or schooner dating from the first quarter of the nineteenth century. The hull of the vessel is sheathed in copper or a cupreous alloy, which accounts for the wreck s state of preservation. In addition to the hull, substantial remains of the standing rigging survive, lying along the starboard side. Few artifacts could be identified from the video alone, but one significant find included the discovery of a rare ship s stove. The bow of the wreck is partly intact, but the stern is disarticulated. The site was found to have been impacted within the last decade, most likely by a large anchor cable, which is suggested by a ragged tear through the port side of the hull and a drag scar that crosses the wreck. Subsea Processing in Deepwater Environments The MMS study report, Effects of Subsea Processing on Deepwater Environments in the Gulf of Mexico (Grieb et al., 2008), represents the compilation and synthesis of existing published and unpublished literature on the environmental effects of subsea operations on the deepwater environment. Subsea processing technologies that are currently being implemented in deep water include multiphase pumps (Type 1) and partial separation with pumping (Type 2). Technologies being developed for future application include combinations of separators, scrubbers, and pumps that allow complete separation of production stream at the seabed (Type 3). The most advanced systems (Type 4) are likely to include multistage separation and fluid treatment with the production of export quality oil and gas. The primary difference between surface and subsea technologies is the restricted ability to detect and respond to releases in the deepwater environment and the extreme temperatures and pressures on the seafloor. A key technological and environmental issue involved in the implementation of subsea separation is the handling and disposal of produced waters and sands. Options include transport to the surface, reinjection into depleted formations, or discharge to the ambient environment. The potential impacts and major environmental concerns associated with subsea operations are similar to those observed with existing technologies. These include the release of drilling fluids and untreated drill cuttings during exploration and production; the catastrophic release of large volumes of hydrocarbons or utility fluids due to failures in piping, seals, and connections; and the release of untreated produced water and sands. The difference between existing and subsea technologies is the restricted ability to detect and respond to these releases in the deepwater environment. The advent of subsea technologies also 31

46 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS introduces new environmental issues. These include the existence of large temperature differences between operating equipment and ambient conditions, the use of new treatment chemicals, the creation of electromagnetic fields associated with the operation of pumps and other equipment on the seafloor, and noise. The potential toxic effects of new or significantly modified products for treating the production and processing flow streams on benthic and free-swimming organisms should be determined. The deeper water habitats also exhibit unique features that should be considered in regulating subsea processing. For example, the presence of methane hydrates in the seafloor sediments should be identified in advance of subsea development activities. New protocols for assessing the existence, distribution, and ecological significance of benthic communities in these habitats are required. 32

47 DRILLING AND DEVELOPMENT HURRICANE SAFETY-RELATED NOTICES TO LESSEES AND OPERATORS The MMS continually evaluates its regulations to determine which ones need revisions or clarifications. The MMS published 25 new Notices to Lessees and Operators (NTL s) in 2008; over 25 percent of the NTL s focus on drilling, development, and/or production concerns. The effects of Hurricanes Ivan, Katrina, and Rita during the 2004 and 2005 hurricane seasons were detrimental to oil and gas operations in the GOM. These effects included structural damage to fixed production facilities, semisubmersibles, and jack-up rigs. The MMS is concerned about the loss of these facilities and rigs and the resultant pollution from future storms. In an effort to reduce these effects, real and potential, MMS has set forth guidance, through NTL s, to improve performance and safety during hurricanes. NTL 2008-G09 ( Guidelines for Moored Drilling Rig Fitness Requirements for Hurricane Season ) (USDOI, MMS, 2008c) provides guidance on the information that operators should submit with either Form MMS-123, Application for Permit to Drill (APD), or Form MMS- 124, Application for Permit to Modify (APM), to demonstrate that a moored drilling rig is fit to operate at a specific location during hurricane season. The MMS used this information, along with a risk-based assessment program, to calculate an in-depth risk analysis, which compared the probability of failure with the consequence of failure. This allowed MMS to produce detailed assessments and make consistent decisions with respect to mooring requests. In 2008, MMS evaluated 63 requests for mooring location approval during hurricane season. Thirty-five of these mooring requests were approved as-is, 25 were approved with a condition that requires the operator to move off location during the peak of hurricane season or change some of the mooring equipment to mitigate the risk involved, 2 requests were denied, and 1 was a preliminary review. The success of this program is evident by the fact that 14 moored rigs were in the path of hurricane-force winds during the 2008 hurricane season, but only 2 lost station-keeping ability. This represents only 14 percent of the moored rigs going adrift in 2008 versus the 63 percent that went adrift in The 2 rigs that did lose station-keeping did not cause any damage to critical infrastructure such as pipelines, wellheads, or platforms, which highlights the other advantage of the detail assessment program. The MMS and the drilling community are constantly working to ensure that no rigs go adrift during a hurricane, but major advancements have been made to reduce both the probability and consequence of failure in the past 3 years. The MMS s Office of Structural and Technical Support (OSTS) has also utilized NTL s to instruct operators how to conduct assessments of their fixed and floating production facilities in response to the updated metocean criteria published in API Bulletin 2INT- MET, Interim Guidance on Hurricane Conditions in the Gulf of Mexico (API, 2007a). NTL 2007-G27 ( Assessment of Existing OCS Platforms and Related Structures for Hurricane Conditions ) (USDOI, MMS, 2007) provides guidance on how to assess certain existing OCS platforms and related structures to ensure their structural integrity. The NTL requires that facilities meeting specific requirements [e.g., any platform that is subject to the Platform Verification Program or installed in water depths greater than 400 ft (122 m)] conduct an assessment by performing an Ultimate Strength Analysis in accordance with Section 3.3 of API Bulletin 2INT-MET. Section 9 of the same bulletin requires the operator to carry out a site-specific study of the hurricane metocean conditions. 33

48 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS The operators of existing floating platforms were asked to conduct an assessment using a three-step process outlined in API Bulletin 2INT-EX, Interim Guidance for Assessment of Existing Offshore Structures for Hurricane Conditions (API, 2007b). The assessment included a design level check, survival check, and a robustness check. Operators of 92 platforms that were identified as Central Region, high-consequence facilities were required to submit the results of the platform assessments by June 1, Operators of the platforms that were deemed not to be in compliance with the updated metocean criteria were also required to submit a mitigation plan to bring the facility into compliance. Currently, the OSTS is reviewing the assessments submitted by each operator and will conduct a review of the mitigation plan to ensure that all the appropriate steps are being taken to bring the platforms into compliance. PLANS The NTL s play an important role in MMS s ability to communicate with industry and therefore require a significant amount of time and effort be dedicated to their development, but substantially more energy is focused on reviewing and approving plans submitted by operators on a daily basis. Figure 12 shows the number of deepwater Exploration Plans (EP s), deepwater Development Operations Coordination Documents (DOCD s), and Deepwater Operations Plans (DWOP s) received each year since The number of EP s, DOCD s, and DWOP s includes only the initial plans, not revisions or supplements to plans. In addition, the number of DWOP s received includes only initial Conceptual Plans or combined Conceptual Plans/DWOP s as allowed by the revised 30 CFR 250 Subpart B regulations. The MMS requires DWOP s for developments in water depths greater than 1,000 ft (305 m) and Conservation Information Documents (CID) for developments in water depths greater than 1,312 ft (400 m). Some shallow-water activities are included in the data because all subsea developments, regardless of water depth, must file a DWOP. The MMS has found the number of plans received to be a useful indicator in projecting activity levels. Although the order of plan submission and drilling activities can vary with projects, operators generally proceed as follows: File an EP Drill exploratory wells File a Conceptual Plan File a DOCD and CID File a DWOP Install production facilities Drill development wells Begin first production 34

49 D RILLING AND D EVELOPMENT Deepwater DOCD Deepwater EP DWOP 80 Number of Plans Received Deepwater DOCD Deepwater EP DWOP Year Figure 12. Deepwater EP s, DOCD s, and DWOP s received since There was a marked increase in EP s, DOCD s, and Conceptual Plans or combined Conceptual Plans/DWOP s from 1996 to Submittals of EP s reached a peak of 92 in 1999 and then hovered near 70 per year until The number of DOCD submittals reached a high of 28 in 2005 and has leveled off near 10 submittals from 2006 to There was an increase in the number of initial Conceptual Plans or combined Conceptual Plans/DWOP s submitted from 2004 to 2006 (from 25 to 32) and has averaged just fewer than 30 submittals in 2007 and From 2006 to 2008 all three types of plans leveled off in between the high and low values for the past 13 years. In addition to the 28 initial Conceptual Plans and combined Conceptual Plans/DWOP s MMS received in 2008, nine supplemental plans were also received that were not included in the totals above. Also not included in the totals above are 29 initial/supplemental DWOP s (formally Preliminary DWOP s), 17 of which were supplemental. Supplemental plans are often submitted when an operator wants to tie additional wells into a previously approved subsea system or wants to make a modification to the initial plan, such as waterflood, gas lift, or subsea pumping, that was not initially approved. The high number of supplements indicates that operators are not only looking to increase production from new developments but also from existing developments. 35

50 RIGS DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Figure 13 depicts the maximum number of deepwater rigs operating in the GOM for any 1 month period during any 1 year. After a peak in 2001, the number of rigs declined through 2005, followed by a slight increase in 2006, and has remained steady until It should be noted that this figure includes platform rigs and MODU s. Figure 14 shows the approximate number of deepwater MODU s, by water-depth categories, that were contracted to the GOM and worldwide (outside of the GOM) in Approximately 53 percent of MODU s worldwide (not including the GOM) were capable to drill in water depths of 1,500 to 4,999 ft (457 to 1,524 m). In the GOM, approximately 22 percent were capable of drilling in this same water depth range. There is a comparatively larger percentage of rigs within the GOM capable of drilling in water depths greater than 7,500 ft (2,286 m) compared with worldwide, 44 percent to 19 percent. Overall, approximately 21 percent of the worldwide, deepwater fleet are contracted to the GOM. The reader is cautioned not to draw conclusions from the rig count differences between Figures 13 and 14. Figure 13 includes platform rigs in addition to MODU s and only considers rigs which were in operation; Figure 14 addresses only MODU s. Also, the total number of rigs in Figure 14 has increased significantly since the 2008 Deepwater Report (Richardson et al., 2008) because of the availability of rig data from additional operating companies. Further, not all MODU s in Figure 14 are operating at any given time, and upgrades to MODU s that increase their water-depth capability will alter the maximum water-depth rig counts show; consequently, year-to-year comparisons are even more difficult to make Maximum Number of Deepwater Rigs Operating Year Figure 13. Maximum number of platform rigs and MODU s operating in the deepwater Gulf of Mexico in any one year. 36

51 D RILLING AND D EVELOPMENT 70 GOM Worldwide (non-gom) Other, 33 GOM, Africa, 29 North Sea, 38 Brazil, 33 Number of MODU's ,000-1,499 1,500-4,999 5,000-7,499 >= 7,500 Maximum Water Depth Capability (ft) Figure 14. Approximate number of deepwater MODU s contracted to the Gulf of Mexico and worldwide subdivided according to their maximum water-depth capabilities. Inset shows the number of deepwater MODU s in various locations. DRILLING ACTIVITY Figure 15 shows the number of deepwater wells drilled from 1992 through 2008 by water depth category. In 2008, 108 wells were spudded in water depths greater than 1,000 ft (305 m); nearly 80 percent of the wells were for exploration. Ten of the total wells drilled were in water depths greater than 7,500 ft (2,286 m). The number of wells drilled generally increased from 1992 through Conversely, there has been a general decline for the last 7 years. Active hurricane seasons influenced the lower number of wells spudded in 2005 and Only original boreholes and sidetracks (a new bottomhole location) are included in the well counts used in this report. Wells defined as by-passes are specifically excluded. A by-pass is a section of well that does not seek a new objective; it is intended to drill around a section of the wellbore made unusable by stuck pipe or equipment left in the hole. Figures 16 and 17 further delineate the deepwater well counts into exploratory and development wells, respectively. This report uses the designation of exploratory and development wells provided by the operators. The data reflect the variations among operators in classifying wells as either development or exploratory. Figure 16 shows that after decreasing in 2002 and 2003, the number of exploratory wells drilled increased through 2006 and has shown a slight downward trend since then. Exploratory drilling in the 1,500- to 4,999-ft (457- to 1,524-m) water-depth range remained nearly the same from 37

52 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS 2002 through 2004, but increased in 2005 and remained relatively level through The number of wells drilled in 2008 has decreased slightly. From 2005 to 2006, the number of wells drilled in the 5,000- to 7,499-ft (1,524- to 2,286-m) water-depth range nearly doubled, and it has remained level through In 2008, Murphy drilled a discovery, Diamond, in the Lloyd Ridge Area in 9,975 ft (3,040 m) of water. This represents the third deepest water depth for an exploratory well in the GOM. Figure 17 shows that overall there has been a decrease in the number of development wells drilled from 2002 through Possible reasons for the decrease may be the method by which wells are categorized in this report (exploratory versus development), the retention of exploratory wells for production purposes, and the lag from exploration to first production. The complexity of developments in ultra-deep water may also be a factor, requiring operators to spend more time in planning and design. The total number of development wells increased in 2006 and The remarkable increase in the total number of development wells drilled in 2007 in the greater than 7,500-ft (2,286-m) waterdepth interval is mostly associated with the Perdido Regional Host facility. The number of wells drilled in 2008 has dropped back to 2005 levels. In 2008, Shell Oil Company set a world water depth record in drilling and completing a subsea well 9,356 ft (2,852 m) below the GOM s water surface in the Silvertip project at the Perdido Regional Host facility in Alaminos Canyon > 7,500 ft 5,000-7,499 ft 1,500-4,999 ft 1,000-1,499 ft Number of Wells Spudded Year Figure 15. All deepwater wells drilled subdivided by water depth

53 D RILLING AND D EVELOPMENT > 7,500 ft 5,000-7,499 ft 1,500-4,999 ft 1,000-1,499 ft Number of Wells Spudded Year Figure 16. Deepwater exploratory wells drilled subdivided by water depth > 7,500 ft 5,000-7,499 ft 1,500-4,999 ft ,000-1,499 ft Number of Wells Spudded Year Figure 17. Deepwater development wells drilled subdivided by water depth

54 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS DEVELOPMENT SYSTEMS Development strategies vary for deep water, depending on reserve size and distribution, proximity to existing infrastructure, operating considerations (such as well interventions), prior company expertise with similar structures, economic considerations, and an operator s interest in establishing a production hub for the area. Appendix A lists the systems that have begun production in the deepwater GOM, and Figure 18 shows the location of existing deepwater structures by type. Fixed platforms (e.g., Bullwinkle) have economic water-depth limits of about 2,000 ft (610 m). Compliant towers (e.g., Petronius) are usually deployed in water depths of approximately 1,000 to 2,000 ft (305 to 610 m). Tension-leg platforms (TLP s) (e.g., Brutus, Magnolia, Marco Polo, and Shenzi) are frequently used in 1,000- to 5,000-ft (305- to 1,524-m) water depths. Spars (e.g., Genesis, Red Hawk, Tahiti, and Perdido); semisubmersible production units (e.g., Na Kika and Blind Faith); FPU s (e.g., Phoenix); and FPSO s (e.g., Cascade and Chinook) may be used in water depths ranging up to and beyond 10,000 ft (3,048 m). Subsea systems are capable of producing hydrocarbons from reservoirs covering the entire range of water depths that industry is exploring. They range in complexity from a single subsea well producing to a nearby fixed platform, TLP, or floating production system (FPS), to multiple wells producing through a manifold and pipeline system to a distant production facility. Subsea systems continue to be a key component in the success in deep water to date. In fact, approximately 290 productive wells in deep water are subsea. INDUSTRY INVOLVEMENT AND NEW TECHNOLOGIES The year 2008 has seen a revived effort for MMS and members of industry to work collectively on research and guidance documents that will provide valuable information for future developments. The MMS was involved in over 35 API committees in API Recommended Practice (RP) 2SK ( Design and Analysis of Station Keeping for Floating Structures ) (API, 2008), API RP 2SM ( Design, Manufacture, Installation, and Maintenance of synthetic Fiber Ropes for Offshore Mooring ) (API, 2007c), API RP 17O ( High Integrity Pressure Protection Systems ) (API, in preparation a), API RP 17G ( Completion/Workover Risers ) (API, in preparation b) and the new high-pressure/hightemperature committee [now named PER 15K ( Protocols for Equipment Rated Greater Than 15,000 PSI )] are a few of the committees in which MMS has been actively involved. These documents will pave the way for the acceptance of new technologies and practices as industry moves to develop prospects in a more challenging environment. Another key initiative between MMS and industry, which is designed to increase the collective understanding of the challenges in the near future and investigate potential solutions, was undertaken by MMS s Technology Assessment and Research program. In 2008, MMS commissioned almost $2 million dollars worth of Operational Safety and Engineering Research projects. Most notably, MMS contracted 29 research projects, many co-funded with other U.S. and international governments or private organizations, focusing on the safety of oil and gas development, alternative energy initiatives, and oil-spill response. Eight of these projects specifically focused on high-pressure/high-temperature concerns, preventing hybrid well failures, and analyzing gas pipeline ruptures. An additional four projects will look into alternative energy design standards and inspection criteria, and three projects will concentrate on Arctic exploration and production. More 40

55 D RILLING AND D EVELOPMENT 41 Figure 18. Location map of currently installed deepwater structures by type.

56 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS information on deepwater research projects can be found at MMS s Web site at The MMS has leveraged the information obtained from these industry meetings and research projects to work with operators on the evaluation and installation of new technologies for their deepwater developments. Shell Exploration and Production Company s (Shell) Perdido Regional Host facility located in Alaminos Canyon Block 857, Petrobras America s Inc (Petrobras) Cascade and Chinook developments located in Walker Ridge Block 206 and 469, respectively, and Energy Resource Technology s Phoenix development located in Green Canyon Block 237 are just a few examples of how the increased communication between industry and MMS are leading to exciting new developments. Perdido The Perdido Spar is located 200 mi (322 km) south of Houston, Texas. The truss spar sets a new record as the deepest spar in the world at over 8,000 ft (2,438 m) of water. Once the development is complete, the spar will have 130,000 barrels of oil equivalent per day (BOE/d) capacity and will accept production from 34 wells, 22 direct vertical access (DVA) subsea wells, and 12 remote subsea wells from the Great White, Silvertip, and Tobago projects. Because of the remote location of the facility in Alaminos Canyon Block 857, 77 mi (124 km) of oil export and 107 mi (172 km) of gas export pipeline will be installed with the facility. The Spar was installed in August 2008, and the topsides were installed in March 2009, with first oil around the turn of the decade. Shell has extended the limits of existing technology and practices to enable development in this ultra-deepwater environment. Perdido represents the first application of full, hostscale subsea separation and boosting, which enables improved recovery by removing about 2,000 pounds per square inch (psi) of back pressure from the wells. The electric submersible pump (ESP)-caisson subsea separation and boosting system utilizes a caisson jetted approximately 300 ft (91 m) into the seafloor and a large ESP to lift fluids approximately 8,000 ft (2,438 m) to the host processing fluid. The subsea separator is configured to utilize cyclonic separation to separate oil and water from the gas phase. The separation will occur at the mudline, with liquid pumped via the ESP to the surface in an inner tubing string, while the gas free flows to the surface in the annulus. This scheme will enable improved recovery and longer well life while also mitigating the risk of hydrates in the system. Perdido is also the first application of wet tree DVA wells. The wet tree DVA concept enables a small host design while enabling a high well count that can be phased in over time utilizing a platform-based drilling rig. Cascade and Chinook Petrobras is poised to bring the first FPSO system to the U.S. GOM in early Because of the ability of the FPSO to perform in extreme water depths and equally extreme distances from shore, Petrobras project, located in the Walker Ridge Area, 165 mi (266 km) offshore, is an ideal location for the FPSO system. The vessel chosen for this distinction is a converted double-hulled tanker that has been renamed the BW Pioneer (Figure 19). Modifications to the vessel commenced in March 2008 in China, with continuing modifications currently being performed in Singapore. The BW Pioneer will have a peak production capacity of 80,000 bo/d, 16 MMcf/d, and 16,000 barrels of water per day (bw/d). 42

57 D RILLING AND D EVELOPMENT Downstream operations will include one gas export pipeline and two dedicated shuttle tankers for oil. Each shuttle tanker will be Jones Act compliant vessels with a storage capacity of 300,000 barrels (bbl). Unique to the BW Pioneer is a detachable turret buoy through which all production flows. The ability to detach during a hurricane or named storm will allow the self-propelled BW Pioneer to motor into safe waters, allowing the storm to pass, then moving back into position, reattaching to the buoy and resuming production with as little downtime as possible. In addition to the FPSO, detachable turret buoy, and shuttle tankers for oil export, Petrobras project will utilize three other technologies considered new to the GOM, including free-standing hybrid risers, polyester mooring, and electric submersible booster pumps. In April 2008, MMS issued a press release (USDOI, MMS, 2008d) announcing the approval of a DOCD for the project. A DOCD outlines the operational plan for developing a project, including timelines for drilling wells and installing production facilities as well as geological and geophysical information. The document also identifies any specific environmental issues that must be addressed, including safety and pollution prevention. The next step in the development process is the MMS review of Petrobras DWOP. The plan, which is expected to be received in early 2009, must be approved before production can commence. Figure 19. The BW Pioneer, the double-hulled tanker that will serve as the FPSO for the Cascade and Chinook developments. (Depiction courtesy of Petrobras.) 43

58 Phoenix DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Energy Resource Technology acquired the Typhoon Field in August 2006 following the loss of the Chevron operated TLP in Green Canyon Block 237. Energy Resource Technology contracted Helix to provide an FPU named Helix Producer I (Figure 20) for redevelopment of the newly renamed Phoenix Field. The Helix Producer I is designed to serve smaller fields in deep water and can also be used as an early production test vessel. The Helix Producer I vessel is a dynamically positioned FPU with a detachable buoy that can quickly disconnect and sink to a water depth of 130 ft (40 m). This allows the vessel to move away from adverse sea conditions. The ability to move away from a storm with personnel on board offered many safety advantages over existing deepwater facilities. A disconnectable transfer system (DTS) (Figure 21) was designed and built by Flexible Engineered Solutions to attach the Helix Producer I to the subsea wells in the Phoenix Field. Although the DTS had been previously used in Asia, the concept was a first for the U.S. GOM. Energy Resource Technology has worked with MMS and Flexible Engineered Solutions to provide a system that meets or exceeds the operating requirements for the GOM. Helix Producer I is currently completing vessel system commissioning in Neorion Shipyard in Syros, Greece. The vessel will arrive in Kiewit Offshore Services in Ingleside, Texas, in May The DTS will be connected to the hull, and topside process modules will be installed on the vessel. The vessel will sail to Green Canyon Block 237 during the fourth quarter of 2009 and begin riser pull in. Once the Helix Producer I vessel has demonstrated to United States Coast Guard and MMS that operation of the DTS and Certificate of Compliance have been achieved, Energy Resource Technology will commence production. The developments and associated new technologies mentioned above are just a few that have been reviewed by MMS s petroleum and structural engineers. Approval can be granted only after significant research and hazard analyses are conducted. The engineers considered many different conditions that can exist offshore and also confirmed that there was a proven effective method to shut-down operations in the case of a failure. Figure 20. The Helix Producer I, a conventional ship-shape floating production unit. (Photo courtesy of Helix Energy Solutions.) 44

59 D RILLING AND D EVELOPMENT Figure 21. Disconnectable transfer system to attach the Helix Producer I to the subsea wells in the Phoenix Field. (Photo courtesy of Helix Energy Solutions.) Thunder Horse Another exciting development that will significantly contribute to our national oil and gas reserves is British Petroleum Exploration and Production, Inc s Thunder Horse. The Thunder Horse platform is located about 150 mi (241 km) southeast of New Orleans in Mississippi Canyon Block 778 at a water depth of approximately 6,050 ft (1,844 m) and is the largest semisubmersible facility in the world at 130,000 tonnes (143,300 U.S. tons) displacement and has a deck load capacity of 40,000 tonnes (44,092 U.S. tons). Production is from reservoirs between 14,000 and 19,000 ft (4,267 and 5,791 m) below the seabed, with reservoir pressures of 13,000 to 18,000 psi and reservoir temperatures of 190º to 270º F (88º to 132º C). The Thunder Horse Field is the largest producer in the GOM. As of March 20, 2009, Thunder Horse was producing approximately 260,000 bo/d and MMcf/d from seven wells. Prior to commencing production from the seventh well, British Petroleum received approval from the MMS New Orleans district to debottleneck the topside production facilities to 275,000 bo/d and 220 MMcf/d. Oil and gas is transported to existing shelf and onshore pipelines via the Proteus and Endymion oil pipeline systems and the Okeanos gas pipeline system, which are part of the Mardi Gras Transportation System, the highest capacity deepwater pipeline system ever built. On the adjacent Thunder Horse North Field, the Discoverer Enterprise MODU is drilling and completing wells that will bring on additional production throughout

60

61 RESERVES AND PRODUCTION RESERVES AND DISCOVERIES Figure 22 shows the number of deepwater discoveries each year since Since 1975 there have been at least 285 deepwater discoveries in the GOM, of which 127 have become proved fields, accounting for BBOE of proved reserves. In an attempt to capture the impact of the deepwater exploratory successes, in addition to MMS proved reserves, unproved reserves, and resource estimates, Figure 22 also includes publicly-available, industry-announced discoveries (IAD s). The IAD volumes contain considerable uncertainty, are based on limited drilling, include numerous assumptions, and have not been confirmed by independent MMS analyses. They do, however, illustrate recent activity better than using only MMS-proved reserve numbers. There is often a significant lag between a successful exploration well and its hydrocarbons being produced. The success of an exploration well may remain concealed from the public for several years until the operator requests a Determination of Well Producibility from MMS. A successful MMS determination then qualifies the lease as producible and the discovery is placed in a field. The discovery date of that field is then defined as the total depth date of the field s first well that encountered significant hydrocarbons. Hydrocarbon reserves are still considered unproved until it is clear that the field will go on production. Then the reserves move into MMS s proved category. The increase in proved reserves in 1989 is partially a result of the Mars-Ursa discoveries. Likewise, the increase in 1999 is partially a result of the Thunder Horse discovery. These two fields, located in Mississippi Canyon, represent two of the largest in the GOM based on proved barrels of oil equivalent (BOE) reserves (Crawford et al., 2008). The apparent decline of proved reserve additions in recent years is caused by the lag between discovery and development. The increase of unproved reserves, resources, and IAD s in 2006 is partially a result of the Kaskida discovery located in Keathley Canyon. In the last 2 years, oil and gas volumes added to the GOM decreased sharply from those in This is due in part to the fact that MMS has not completed volumetric estimates for 2007 and 2008 discoveries in deep water. PRODUCTION TRENDS Leasing, drilling, and discoveries all stepped into deeper waters with time. Production, the final piece in the puzzle, is no exception. In 2007, approximately 70 percent of the GOM s oil production and 36 percent of its natural gas were from wells in 1,000 ft (305 m) of water or greater. Figure 23 illustrates deepwater projects that began production in 2007 and 2008 and those expected to commence production in the next 5 years. Seven deepwater projects went online in 2008: Bass Lite and Neptune in Atwater Valley; and Blind Faith, Mississippi Canyon Block 161, Raton, Thunder Horse, and Valley Forge in Mississippi Canyon. In addition to the projects displayed on Figure 23, more are likely to come online in the next few years but are not shown because operators have not yet announced their plans. See Appendix A for a listing of all productive projects. 47

62 30 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Number of Discoveries ,000 2,500 2,000 1,500 1, Million Barrels of Oil Equivalent Discovery Year 0 Proved reserves Unproved reserves, resources, and industry-announced discoveries Number of discoveries Figure 22. Number and volume of deepwater discoveries. Volumes include MMS reserves, MMS resources, and industryannounced discoveries. 48

63 R ESERVES AND P RODUCTION 49 Figure 23. Deepwater projects that began production in 2007 and 2008 and those expected to begin production by yearend 2013.

64 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Table 6 shows that the 20 most prolific producing blocks in the GOM continue to be located in deep water. The total cumulative production numbers on this table are from January 2006 through December With the onset of production from the Thunder Horse Field in 2008, it is currently the largest daily producer in the GOM. As of March 20, 2009, production was approximately 260,000 bo/d from seven wells. Table 6. Top 20 Producing Blocks for the Years Block Project Name Operator Water Depth (ft) 1 Production (BOE) 2 MC 807 Mars Shell 2,933 53,019,685 MC 383 Kepler (Na Kika) British Petroleum 5,739 39,067,447 MC 809 Ursa Shell 3,800 35,833,474 GC 782 Mad Dog British Petroleum 4,420 29,236,814 GC 644 Holstein British Petroleum 4,340 23,479,322 VK 786 Petronius ChevronTexaco 1,753 22,756,704 VK 912 Ram Powell Shell 3,216 21,399,283 GB 668 Gunnison Kerr-McGee 3,126 19,934,221 MC 686 Mensa Shell 5,329 19,203,737 MC 429 Ariel (Na Kika) British Petroleum 6,240 19,035,754 GB 215 Conger Amerada Hess 1,500 18,676,616 MC 127 Horn Mountain British Petroleum 5,400 18,672,184 MC 765 Princess Shell 3,642 18,228,344 MC 763 Mars Shell 2,933 18,086,449 EB 602 Nansen Kerr-McGee 3,580 17,605,355 GB 783 Magnolia ConocoPhillips 4,670 15,126,505 GC 202 Brutus Shell 2,985 14,899,369 MC 85 King British Petroleum 5,317 14,841,496 GC 562 K2 Anadarko 3,970 12,929,509 MC 773 Devil s Tower Eni 5,610 12,813,802 1 Water depths are approximate and may vary depending on the location of the production facility or the location of a completed well (average of wells or deepest well site) in the block. 2 Cumulative production from January 2006 through December Figures 24a and 24b illustrate the importance of the GOM to the Nation s energy supply. The GOM supplied approximately 25 percent of the Nation s domestic oil and 14 percent of the Nation s domestic gas production in A significant portion (approximately 18%) of the oil volume came from the deepwater GOM. Nine projects tied back to the Independence Hub facility came online from July through October of When at peak capacity, production from the hub will add 1 Bcf/d, representing over 10 percent of the gas production from the total GOM. Figure 25a illustrates historic trends in oil production. Shallow-water oil production rose rapidly in the 1960 s, peaked in 1971, and has undergone cycles of increase and decline since then. Since 1997, the shallow-water GOM oil production has steadily declined and, at the end of 2006, was at its lowest level since It has, however, begun to increase in From 1995 through 2003, deepwater oil production experienced a dramatic increase similar to that seen in the shallow-water GOM during the 1960 s, offsetting declines in shallow-water oil production. In fact, beginning in 2000, more oil has been 50

65 R ESERVES AND P RODUCTION Shallow-water GOM 7.6% Deepwater GOM 17.8% Shallow-water GOM 8.8% Deepwater GOM 5.0% Other U.S. 74.6% Figure 24a. Estimated U.S. oil production in Other U.S. 86.2% Figure 24b. Estimated U.S. gas production in produced from the deepwater areas of the GOM than from shallow waters. Starting in 2003, deepwater oil production basically leveled off. Figure 25b shows similar production trends for gas. Shallow-water gas production rose sharply throughout the 1960 s and 1970 s, and then remained relatively stable over the next 17 years before declining steadily from 1997 through At the same time shallow-water gas production started to decline in 1997, deepwater gas production began to increase, helping to offset the declines from shallow water. Gas production from deep water has, however, declined slightly from 2003 through Appendix B lists historic annual GOM oil and gas production values. PRODUCTION RATES Figures 26a and 26b compare maximum historic daily production rates for each lease in the GOM (i.e., the well with the highest historic production rate is shown for each lease). These maps show that many deepwater fields produce at some of the highest rates encountered in the GOM. Figure 26a also shows that maximum oil rates were significantly higher off the southeast Louisiana coast than off the Texas coast. Figure 26b illustrates the high deepwater gas production rates relative to the rest of the GOM. The relatively high gas rates from fields denoted with an asterisk are tied back to the Independence Hub facility. The hub s 1 Bcf/d capacity accounts for over 10 percent of the total gas production from the GOM. Note also the excellent production rates from the Norphlet trend (off the Alabama coast) and the Corsair trend (off the Texas coast). 51

66 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS 1,200 Shallow-water oil Deepwater oil 1,000 Thousand Barrels of Oil per Day Figure 25a. Comparison of average annual shallow- and deepwater oil production. Year Shallow-water gas Deepwater gas 12 Billion Cubic Feet of Gas per Day Figure 25b. Comparison of average annual shallow- and deepwater gas production. Year

67 R ESERVES AND P RODUCTION 53 Figure 26a. Maximum historic oil well production rates.

68 1000 ft 54 Maximum Gas Rate (Mcf per day) 159,000 71,000 39,000 22,000 11,000 Texas BA A ft * Tied back to Independence Hub WC 46 Harrier 5000 ft 7500 ft Louisiana Figure 26b. Maximum historic gas well production rates. Popeye Mississippi Virgo Mondo NW Extension* Marlin Alabama San Jacinto* Q* Spiderman* Vortex* Jubilee* Atlas* Cheyenne* Merganser* Florida DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS

69 HIGHLIGHTS AND CONCLUSIONS HIGHLIGHTS At the end of 2008, 57 percent of all GOM leases were located in deep water. Central Lease Sale 206 attracted approximately $3.7 billion in high bids the most since Federal offshore leasing began in The MMS received 1,057 bids from 85 companies on 615 blocks, of which 603 were ultimately awarded. Sixty-nine percent of all blocks receiving bids were in 1,000 ft (305 m) of water or greater. Eastern Sale 224 attracted almost $65 million in high bids. The MMS received 58 bids from six companies on 36 blocks, of which all were ultimately awarded. Sale 224 offered approximately 0.5 million acres, from what is known as the 181 Area, which has been off-limits to exploration since Western Lease Sale 207 attracted approximately $487 million in high bids. The MMS received 423 bids from 53 companies on 319 blocks, of which 313 were ultimately awarded. Seventy-eight percent of all blocks receiving bids were in 1,000 ft (305 m) of water or greater. Central Lease Sale 208 attracted approximately $703 million in high bids. The MMS received 476 bids from 70 companies on 348 blocks. Seventytwo percent of all blocks receiving bids were in 1,000 ft (305 m) of water or greater. Areas for lease in Sale 208 included approximately 4.2 million acres, from what is known as the 181 South Area, which has been offlimits to exploration since There are 15 newbuild MODU s being built and contracted for use in the ultra-deepwater Gulf and will be ready for operation in the next 2-3 years they will be capable of operating in water depths up to 12,000 ft (3,658 m) and drilling up to 40,000 ft (12,192 m) in depth. Approximately 21 percent of the worldwide, deepwater MODU s are contracted to the GOM. In 2008, 108 wells were spudded in water depths greater than 1,000 ft (305 m), and nearly 80 percent were for exploration. Shell Oil Company set a world water depth record in drilling and completing a subsea well 9,356 ft (2,852 m) below the water surface in the Silvertip project at the Perdido Regional Host facility in Alaminos Canyon. There were 15 industry-announced discoveries in 2008, including one in the Lower Tertiary trend. 55

70 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Since 1975 there have been at least 285 deepwater discoveries in the GOM, of which 127 have become proved fields, accounting for BBOE of proved reserves. In 2007, deep water continued to be a very important part of the total GOM production, providing approximately 70 percent of the oil and 36 percent of the gas in the region. There were 141 producing projects in the deepwater GOM at the end of 2008, up from 130 at the end of Seven projects came online in 2008, including record production from Thunder Horse. The 20 most prolific producing blocks in the GOM continue to be located in deep water. With the onset of production from the Thunder Horse Field in 2008, it is currently the largest daily producer in the GOM. As of March 20, 2009, production was approximately 260,000 bo/d from seven wells. Nine fields associated with the Independence Hub production facility came online in The hub s 1 Bcf/d capacity accounts for over 10 percent of the total gas production from the GOM. The first floating, production, storage, and offloading (FPSO) system in the U.S. GOM, the BW Pioneer vessel, will develop the Cascade and Chinook Fields in Walker Ridge, with first oil expected in Unique to the BW Pioneer is a detachable turret buoy, connecting the subsea wells to the FPSO. Petrobras Cascade/Chinook development project will utilize four technologies considered new to the GOM, including free-standing hybrid risers, polyester mooring, electric submersible booster pumps, and shuttle tankers for oil export. The first ship-shape, dynamically positioned, disconnectable turret floating production unit (FPU) in the U.S. GOM, Helix Producer I, will develop the Phoenix Field in Green Canyon, with a planned production startup in The Perdido Regional Host facility will produce the Great White, Tobago, and Silvertip discoveries in Alaminos Canyon beginning in The truss spar was installed in August 2008 and set a new record as the deepest spar in over 8,000 ft (2,438 m) of water. Several NTL s were implemented in 2008 to inhibit the loss of or damage to offshore structures during hurricane season. 56

71 H IGHLIGHTS AND C ONCLUSIONS The MMS was involved in over 35 API committees in 2008 to pave the way for acceptance of new technologies and practices as industry moves to develop prospects in a more challenging environment. CONCLUSIONS With complex deepwater developments, it is not uncommon for there to be considerable lag time between leasing and first production. The Thunder Horse Field illustrates the lag time that can exist between leasing and first production. It was leased in 1988, the first well was drilled in 1999, and production began in Figure 27 demonstrates average lags associated with deepwater operations. This figure uses data from only productive deepwater leases and illustrates the lags between leasing and qualification and from qualification to first production. Operators sometimes announce discoveries to the public long before qualifying the lease as producible with MMS (and thereby granted field status). Note that, since deepwater leases are in effect for 8 or 10 years, the data are incomplete beyond Additional time to first production Additional time to qualify Years to first well Leases still in primary term Number of Years No production from leases acquired post-2007 Year Lease Acquired Figure 27. Average lag time from leasing to first production for producing deepwater fields. Figure 27 indicates that, as industry gains experience in the deepwater areas of the Gulf, the time between leasing and production is reduced. Since 1988, there has been a reduction in time from lease acquisition to first well drilled. Developments near accessible infrastructure and the use of proven development technologies reduce the lag between leasing and production. Conversely, as new discoveries move into dramatically deeper water depths, and with many new discoveries being far from existing infrastructure, an 57

72 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS increase in lag time between leasing and production should be anticipated. However, these challenges continually push industry to develop new technologies and development techniques for the GOM. For example, the Lower Tertiary trend is in very deep water, has target depths below 25,000 ft (7,620 m), has the potential for high-pressure/high-temperature conditions, and many of the discoveries underlie a thick salt layer, all of which complicate drilling and development operations. The first fields scheduled for production from the Lower Tertiary trend in Walker Ridge are Cascade and Chinook. Because these fields are so remote from existing infrastructure, they will be developed with subsea wells tied into an FPSO, a first in U.S. GOM waters. Another example of development challenges in very deep waters is the Perdido truss spar, which will be the hub facility for the Great White, Silvertip, and Tobago projects. Because of the remote location of the facility in Alaminos Canyon Block 857, 77 mi (124 km) of oil export and 107 mi (172 km) of gas export pipeline will be installed with the facility. Additionally, Perdido represents the first application of full, host-scale subsea separation and boosting. The results of first production from Cascade/Chinook and the Perdido facility are scheduled for These results will impact all other operators in the Lower Tertiary trend, both geologically and technologically. AMERICA S OFFSHORE ENERGY FUTURE The future of deepwater GOM exploration and production remains very promising. The large number of active deepwater leases, the development of important new discoveries, the growing deepwater infrastructure and new technologies, and the onset of ultra-deepwater production are all indicators of this maturing and yet still expanding frontier. All of these factors will ensure that the deepwater GOM will remain one of the world s premier oil and gas basins. 58

73 CONTRIBUTING PERSONNEL This report includes contributions from the following individuals: Pat Adkins Asani Brewton Deborah Miller Mike Prendergast Terry Rankin 59

74

75 REFERENCES American Petroleum Institute (API). In preparation a. Recommended Practice API RP 17 O, High Integrity Pressure Protection Systems (HIPPS). Washington, DC: American Petroleum Institute. American Petroleum Institute (API). In preparation b. Recommended Practice API RP 17 G, Completion/Workover Risers. Washington, DC: American Petroleum Institute. American Petroleum Institute (API). 2007a. API BULL 2INT-MET: Interim Guidance on Hurricane Conditions in the Gulf of Mexico. 1st edition. Washington, DC: American Petroleum Institute. 68 pp. American Petroleum Institute (API). 2007b. API BULL 2INT-EX: Interim Guidance for Assessment of Existing Offshore Structures for Hurricane Conditions. 1st edition. Washington, DC: American Petroleum Institute. 24 pp. American Petroleum Institute (API). 2007c. API RP 2SM: Design, Manufacture, Installation, and Maintenance of Synthetic Fiber Ropes for Offshore Mooring. Addendum. Washington, DC: American Petroleum Institute. 8 pp. American Petroleum Institute (API) API RP 2SK: Design and Analysis of Stationkeeping Systems for Floating Structures. Revision/Edition:3. Washington, DC: American Petroleum Institute. 256 pp. Brooks, J.M., C. Fisher, H. Roberts, B. Bernard, I. McDonald, R. Carney, S. Joye, E. Cordes, G. Wolff, and E. Goehring Investigations of Chemosynthetic Communities on the Lower Continental Slope of the Gulf of Mexico: Interim Report 1. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Internet Web site: PDFImages/ESPIS/4/4320.pdf. Church, R.A. and D.J. Warren Viosca Knoll Wreck: Discovery and Investigation of an Early Nineteenth-century Sailing Ship in 2,000 feet of Water. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Internet Web site: PDFImages/ESPIS/4/4315.pdf. Cranwick, D. and J. Regg Deepwater in the Gulf of Mexico: America s New Frontier. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Report MMS pp. Crawford, T.G., G.L. Burgess, S.M. Haley, C.J. Kinler, G.D. Klocek, M.T. Prendergast, and N.K. Shepard Estimated Oil and Gas Reserves, Gulf of Mexico, December 31, U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Report MMS pp. Donohue, K., P. Hamilton, R. Leben, R. Watts, and E. Waddell. 2008a. Survey of Deepwater Currents in the Northwestern Gulf of Mexico. Volume I: Executive Summary. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. 61

76 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Donohue, K., P. Hamilton, R. Leben, R. Watts, and E. Waddell. 2008b. Survey of Deepwater Currents in the Northwestern Gulf of Mexico. Volume II: Technical Report. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Federal Register Federal Outer Continental Shelf (OCS) Administrative Boundaries Extending from the Submerged Lands Act Boundary Seaward to the Limit of the United States Outer Continental Shelf. Tuesday, January 3, FR 1, pp Federal Register Outer Continental Shelf (OCS) Central Planning Area (CPA) Gulf of Mexico (GOM) Oil and Gas Lease Sale 208: Final Notice of Sale, Wednesday, January 14, FR 9, pp French, L.S., E.G. Kazanis, L.C. Labiche, T.M. Montgomery, G.E. Richardson Deepwater Gulf of Mexico 2005: Interim Report of 2004 Highlights. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Report MMS pp. Grieb, T.M., T.E. Donn, J. Collins, J. Radde, C. Perez, J.B. Smith, G. Rowe, S. Scott, and G.T. Ririe Effects of Subsea Processing on Deepwater Environments in the Gulf of Mexico. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Hamilton, P., T.J. Berger, J.J. Singer, E. Waddell, J.H. Churchill, R.R. Leben, T.N. Lee, and W. Sturges DeSoto Canyon Eddy Intrusion Study: Final Report. Volume II: Technical Report. U.S. Dept of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Hamilton, P., J.J. Singer, E. Waddell, and K. Donohue Deepwater Observations in the Northern Gulf of Mexico from in-situ Current Meters and PIES. Volume II: Technical Report. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Report MMS pp. Inoue, M., S.E. Welsh, L.J. Rouse, Jr., and E. Weeks Deepwater Currents in the Eastern Gulf of Mexico: Observations at 25.5ºN and 87ºW. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Jochens, A., D. Biggs, K. Benoit-Bird, D. Engelhaupt, J. Gordon, C. Hu, N. Jaquet, M. Johnson, R. Leben, B. Mate, P. Miller, J. Ortega-Ortiz, A. Thode, P. Tyack, and B. Würsig Sperm Whale Seismic Study in the Gulf of Mexico: Synthesis Report. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Internet Web site: McKone, K., N.D. Walker, and E. Weeks Full-water Column Currents Near the Sigsbee Escarpment (91-92ºW Longitude) and Relationships with the Loop Current and Associated Warm and Cold-core Eddies. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS pp. Internet Web site: 4/4295.pdf. 62

77 R EFERENCES Richardson, G.E., L.D. Nixon, C.M. Bohannon, E.G. Kazanis, T.M. Montgomery, and M.P. Gravois Deepwater Gulf of Mexico 2008: America s Offshore Energy Future. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Report MMS pp. Sulak, K.J., M.T. Randall, K.E. Luke, A.D. Norem, and J.M. Miller (eds.) Characterization of Northern Gulf of Mexico Deepwater Hard Bottom Communities with Emphasis on Lophelia Coral Lophelia Reef Megafaunal Community Structure, Biotopes, Genetics, Microbial Ecology, and Geology. USGS Open-File Report ; OCS Study MMS pp. Internet Web site: coastaleco/ofr_ _mms_ /index.html. U.S. Dept. of the Interior, Minerals Management Service Deepwater Gulf of Mexico OCS Currents. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. MMS Safety Alert Notice No U.S. Dept. of the Interior, Minerals Management Service Assessment of Existing OCS Platforms and Related Structures for Hurricane Conditions. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. NTL 2007-G27. U.S. Dept. of the Interior, Minerals Management Service. 2008a. MMS Awards $5.5 Million to Study Gulf s Loop Current. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. MMS News Release No. R U.S. Dept. of the Interior, Minerals Management Service. 2008b. MMS Underway with $3.7 Million Deepwater Coral Study. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. MMS News Release No. R U.S. Dept. of the Interior, Minerals Management Service. 2008c. Guidelines for Moored Drilling Rig Fitness Requirements for Hurricane Season. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. NTL 2008-G09. U.S. Dept. of the Interior, Minerals Management Service. 2008d. Minerals Management Service Approves Development Plans for First Use of Floating Production Storage Offloading Facility in Gulf of Mexico. Press Release #3807, April 29, U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. Internet Web site: 63

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79 APPENDICES APPENDIX A. DEVELOPMENT SYSTEMS OF PRODUCTIVE DEEPWATER PROJECTS Year of First Production Project Name 1 Operator Block Water Depth (ft) 2 System Type 1979 Cognac Shell MC 194 1,023 Fixed Platform 1984 Lena ExxonMobil MC 280 1,000 Compliant Tower 1988 GC 29 3 Placid GC 29 1,540 Semisubmersible 4 / Subsea 1988 GC 31 3 Placid GC 31 2,243 Subsea 1989 Bullwinkle Shell GC 65 1,353 Fixed Platform 1989 Jolliet ConocoPhillips GC 184 1,760 TLP 1991 Amberjack British Petroleum MC 109 1,100 Fixed Platform 1992 Alabaster ExxonMobil MC 485 1,438 Subsea 1993 Diamond 3 Kerr-McGee MC 445 2,095 Subsea 1993 Zinc ExxonMobil MC 354 1,478 Subsea 1994 Auger Shell GB 426 2,860 TLP 1994 Pompano and Pompano II British Petroleum VK 989 1,290 Fixed Platform/ Subsea 1994 Tahoe and SE Tahoe Shell VK 783 1,500 Subsea 1995 Cooper 3 Newfield GB 388 2,097 Semisubmersible Shasta 3 ChevronTexaco GC 136 1,048 Subsea 1995 VK 862 Walter VK 862 1,043 Subsea 1996 Mars Shell MC 807 2,933 TLP/Subsea 1996 Popeye Shell GC 116 2,000 Subsea 1996 Rocky 3 Shell GC 110 1,785 Subsea 1997 Mensa Shell MC 731 5,318 Subsea 1997 Neptune Kerr-McGee VK 826 1,930 Spar/Subsea 1997 Ram-Powell Shell VK 956 3,216 TLP 1997 Troika British Petroleum GC 200 2,721 Subsea 1998 Arnold Marathon EW 963 1,800 Subsea 1998 Baldpate Amerada Hess GB 260 1,648 Compliant Tower 1998 Morpeth Eni EW 921 1,700 TLP/Subsea 1998 Oyster Marathon EW 917 1,195 Subsea 1999 Allegheny Eni GC 254 3,294 TLP 1999 Angus Shell GC 113 2,045 Subsea 1999 Dulcimer 3 Mariner GB 367 1,120 Subsea 1999 EW 1006 Walter EW ,884 Subsea 1999 Gemini ChevronTexaco MC 292 3,393 Subsea 1999 Genesis ChevronTexaco GC 205 2,590 Spar 1999 Macaroni Shell GB 602 3,600 Subsea 1999 Penn State Amerada Hess GB 216 1,450 Subsea 1999 Pluto Mariner MC 674 2,828 Subsea 65

80 Year of First Production DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Project Name 1 Operator Block 66 Water Depth (ft) 2 System Type 1999 Ursa Shell MC 809 3,800 TLP 1999 Virgo TotalFinaElf VK 823 1,130 Fixed Platform 2000 Allegheny South Eni GC 298 3,307 Subsea 2000 Black Widow Mariner EW 966 1,850 Subsea 2000 Conger Amerada Hess GB 215 1,500 Subsea 2000 Diana ExxonMobil EB 945 4,500 Subsea 2000 Europa Shell MC 935 3,870 Subsea 2000 Hoover ExxonMobil AC 25 4,825 Spar 2000 King Shell MC 764 3,250 Subsea 2000 Marlin British Petroleum VK 915 3,236 TLP 2000 Northwestern Amerada Hess GB 200 1,736 Subsea 2000 Petronius ChevronTexaco VK 786 1,753 Compliant Tower 2001 Brutus Shell GC 158 3,300 TLP 2001 Crosby Shell MC 899 4,400 Subsea 2001 Einset 3 Shell VK 872 3,500 Subsea 2001 EW 878 Walter EW 878 1,585 Subsea 2001 Ladybug ATP GB 409 1,355 Subsea 2001 Marshall ExxonMobil EB 949 4,376 Subsea 2001 MC 68 3 Walter MC 68 1,360 Subsea 2001 Mica ExxonMobil MC 211 4,580 Subsea 2001 Nile British Petroleum VK 914 3,535 Subsea 2001 Oregano Shell GB 559 3,400 Subsea 2001 Pilsner Unocal EB 205 1,108 Subsea 2001 Prince El Paso EW ,500 TLP 2001 Serrano Shell GB 516 3,153 Subsea 2001 Typhoon 5 ChevronTexaco GC 237 2,107 TLP 2002 Aconcagua TotalFinaElf MC 305 7,100 Subsea 2002 Aspen British Petroleum GC 243 3,065 Subsea 2002 Camden Hills Marathon MC 348 7,216 Subsea 2002 East Boomvang 6 Kerr-McGee EB 688 3,795 Subsea 2002 Horn Mountain British Petroleum MC 127 5,400 Spar 2002 King 7 British Petroleum MC 84 5,418 Subsea 2002 King Kong Mariner GC 472 3,980 Subsea 2002 King's Peak British Petroleum DC 133 6,845 Subsea 2002 Lost Ark Nobel EB 421 2,960 Subsea 2002 Madison ExxonMobil AC 24 4,856 Subsea 2002 Manatee Shell GC 155 1,939 Subsea 2002 Nansen Kerr-McGee EB 602 3,685 Spar 2002 Navajo Kerr-McGee EB 690 4,210 Subsea 2002 North Boomvang 6 Kerr-McGee EB 643 3,650 Spar 2002 Princess Shell MC 765 3,642 Subsea

81 Year of First Production A PPENDICES Project Name 1 Operator Block 67 Water Depth (ft) 2 System Type 2002 Sangria 3 Hydro GOM GC 177 1,487 Subsea 2002 Tulane Amerada Hess GB 158 1,054 Subsea 2002 Yosemite Mariner GC 516 4,150 Subsea 2003 Boris 5 BHP Billiton GC 282 2,378 Subsea 2003 Dawson 8 Kerr-McGee GB 669 3,152 Subsea 2003 Durango 8 Kerr-McGee GB 667 3,105 Subsea 2003 East Anstey/Na Kika Shell MC 607 6,590 Semisubmersible/ Subsea Falcon Marubeni EB 579 3,638 Subsea 2003 Fourier/Na Kika Shell MC 522 6,940 Semisubmersible/ Subsea Gunnison Kerr-McGee GB 668 3,100 Spar 2003 Habanero Shell GB 341 2,015 Subsea 2003 Herschel/Na Kika Shell MC 520 6,739 Semisubmersible/ Subsea Matterhorn TotalFinaElf MC 243 2,850 TLP 2003 Medusa Murphy MC 582 2,223 Spar 2003 North Medusa Murphy MC 538 2,223 Subsea 2003 Pardner Anadarko MC 401 1,139 Subsea 2003 Tomahawk Marubeni EB 623 3,412 Subsea 2003 West Boomvang 6 Kerr-McGee EB 642 3,678 Subsea 2003 Zia Devon MC 496 1,804 Subsea 2004 Ariel/Na Kika British Petroleum MC 429 6,240 Semisubmersible/ Subsea Coulomb/Na Kika Shell MC 657 7,591 Semisubmersible/ Subsea Devil's Tower Eni MC 773 5,610 Spar 2004 Front Runner Murphy GC 338 3,330 Spar 2004 GB 208 McMoran GB 208 1,275 Subsea 2004 Glider Shell GC 248 3,440 Subsea 2004 Hack Wilson Kerr-McGee EB 599 3,650 Subsea 2004 Harrier 3 Pioneer EB 759 4,114 Subsea 2004 Holstein British Petroleum GC 645 4,340 Spar 2004 Kepler/Na Kika British Petroleum MC 383 5,759 Semisubmersible/ Subsea Llano Shell GB 386 2,340 Subsea 2004 Magnolia ConocoPhilips GB 783 4,674 TLP 2004 Marco Polo Anadarko GC 608 4,300 TLP 2004 MC 837 Walter MC 837 1,524 Subsea 2004 Ochre Mariner MC 66 1,144 Subsea 2004 Raptor Pioneer EB 668 3,710 Subsea 2004 Red Hawk Kerr-McGee GB 877 5,300 Spar 2004 South Diana ExxonMobil AC 65 4,852 Subsea

82 Year of First Production DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Project Name 1 Operator Block 68 Water Depth (ft) 2 System Type 2005 Baccarat W and T Offshore GC 178 1,404 Subsea 2005 Citrine LLOG GC 157 2,614 Subsea 2005 GC 137 Nexen GC 137 1,168 Subsea 2005 K2 Anadarko GC 562 4,006 Subsea 2005 Killer Bee Walter MC 582 2,223 Subsea 2005 Mad Dog British Petroleum GC 782 4,420 Spar 2005 Swordfish Noble VK 962 4,677 Subsea 2005 Triton and Goldfinger Eni MC 728 5,610 Subsea 2006 Constitution Kerr-McGee GC 680 4,970 Spar 2006 Dawson Deep Kerr-McGee GB 625 2,965 Subsea 2006 Gomez ATP MC 711 2,975 Semisubmersible 2006 K2 North Anadarko GC 518 4,049 Subsea 2006 Lorien Noble GC 199 2,315 Subsea 2006 Rigel Eni MC 252 5,225 Subsea 2006 Seventeen Hands Eni MC 299 5,881 Subsea 2006 SW Horseshoe Walter EB 430 2,285 Subsea 2006 Ticonderoga Kerr-McGee GC 768 5,272 Subsea 2007 Anduin ATP MC 755 2,904 Subsea 2007 Atlantis British Petroleum GC 787 7,050 Semisubmersible 2007 Atlas-AtlasNW/Ind. Hub Anadarko LL 50 8,934 FPS/Subsea Cheyenne/Ind. Hub Anadarko LL 399 8,951 FPS/Subsea Cottonwood Petrobras GB 244 2,130 Subsea 2007 Deimos Shell MC 806 3,106 Subsea 2007 Jubilee/Ind. Hub Anadarko AT 349 8,825 FPS/Subsea Merganse /Ind. Hub Anadarko AT 37 8,015 FPS/Subsea Mondo NW/Ind. Hub Anadarko LL 1 8,340 FPS/Subsea Q/Ind. Hub Hydro GOM MC 961 7,925 FPS/Subsea San Jacinto/Ind. Hub Eni DC 618 7,850 FPS/Subsea Shenzi 11 BHP Billiton GC 652 4,300 TLP/Subsea 2007 Spiderman/Ind. Hub Anadarko DC 621 8,087 FPS/Subsea Tiger DeepGulf Energy GC 195 1,900 Subsea 2007 Vortex/Ind. Hub Anadarko AT 261 8,344 FPS/Subsea Wrigley Newfield MC 506 3,911 Subsea 2008 Bass Lite Mariner AT 426 6,634 Subsea 2008 Blind Faith ChevronTexaco MC 696 6,989 Semisubmersible 2008 MC 161 Walter MC 161 2,924 Subsea 2008 Neptune BHP Billiton AT 575 4,232 TLP 2008 Raton Nobel MC 248 3,290 Subsea 2008 Thunder Horse British Petroleum MC 778 6,037 Semisubmersible 2008 Valley Forge LLOG MC 707 1,538 Subsea 2009 Clipper ATP GC 299 3,452

83 Year of First Production A PPENDICES Project Name 1 Operator Block 69 Water Depth (ft) 2 System Type 2009 Dorado British Petroleum VK 915 3,236 Subsea 2009 Geauxpher Mariner GB 462 2, GB 302 Walter GB 302 2,410 Subsea 2009 Isabela British Petroleum MC 562 6,500 Subsea 2009 Longhorn Eni MC 502 2,442 Subsea 2009 MC 72 LLOG MC 72 2, MC 583 Walter MC 583 2, Mirage and Morgus ATP MC 941 4,000 Mini TLP 2009 Pegasus Eni GC 385 3,498 Subsea 2009 Tahiti ChevronTexaco GC 640 4,000 Spar 2009 Thunder Hawk Murphy MC 734 6,050 Semisubmersible 2009 Thunder Horse North British Petroleum MC 776 5,660 Subsea 2009 Unreleasable Unreleasable Unreleasable Caesar and Tonga Anadarko GC 683 4,672 Subsea 2010 Cascade Petrobras WR 206 8,143 FPSO/Subsea Chinook Petrobras WR 469 8,831 FPSO/Subsea Droshky Marathon GC 244 2, Great White Shell AC 857 8,000 Spar 2010 MC 241 Walter MC 241 2, Phoenix 5 Helix GC 237 2,679 FPU 2010 Silvertip Shell AC 815 9,226 Subsea 2010 Telemark ATP AT 63 4,385 Mini TLP 2010 Tobago Shell AC 859 9,627 Subsea 2010 Unreleasable Unreleasable Ozona Marathon GB 515 3, Unreleasable Unreleasable Unreleasable Unreleasable Unreleasable Unreleasable Unreleasable Unreleasable Unreleasable Unreleasable Puma British Petroleum GC 823 4, Unreleasable Unreleasable 12

84 DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS 1 Editions of this report prior to 2004 listed deepwater fields rather than projects. A block may be listed under more than one project name because of lease relinquishment, expiration, or termination and subsequent re-leasing. Some announced discoveries never reached the project stage and are listed under their prospect names. 2 Water depths are approximate and may vary depending on the location of the production facility or the location of a well (average of wells or deepest well site). 3 Indicates projects that are no longer on production. 4 The semisubmersibles associated with the GC 29 and Cooper projects have been removed. 5 The TLP associated with the Typhoon and Boris projects was destroyed by Hurricane Rita in Helix is scheduled to redevelop the projects with an FPU by early The new project name is Phoenix Report referred to entire area as Boomvang. 7 Includes King South. 8 Included in 2004 Report with Gunnison. 9 Na Kika semisubmersible is located in Mississippi Canyon Block 474 in 6,378 ft (1,944 m) of water. 10 Independence Hub FPS is located in Mississippi Canyon Block 920 in 7,920 ft (2,414 m) of water. 11 The Shenzi project includes the Genghis Khan development. Production commenced from Genghis Khan in October 2007 and will be transported to the Marco Polo TLP in Green Canyon Block 608 in 4,300 ft (1,311 m) of water. The Shenzi portion of the project will feature a TLP in Green Canyon Block 653 in 4,812 ft (1,467 m) of water and is scheduled to commence production in mid Unreleasable operator has commitment to produce and/or is planning to develop project but has not publicly released project information. 13 The Cascade and Chinook Fields will be developed by an FPSO operated by Petrobras. The FPSO will be located in Walker Ridge Block 249 in approximately 8,200 ft (2,499 m) of water. 70

85 A PPENDICES APPENDIX B. AVERAGE ANNUAL GOM OIL AND GAS PRODUCTION Year Shallow- Water Oil (MMbbl) Deepwater Oil (MMbbl) Total GOM Oil (MMbbl) Shallow- Water Gas (Bcf) Deepwater Gas (Bcf) Total GOM Gas (Bcf) , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,043 71

86 Year DEEPWATER GULF OF MEXICO 2009: INTERIM REPORT OF 2008 HIGHLIGHTS Shallow- Water Oil (MMbbl) Deepwater Oil (MMbbl) Total GOM Oil (MMbbl) Shallow- Water Gas (Bcf) Deepwater Gas (Bcf) Total GOM Gas (Bcf) , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,881 1,178 5, ,238 1,285 4, ,000 1,425 4, ,606 1,396 4, ,963 1,189 3, ,823 1,089 2, ,776 1,015 2,791 72

87 The Department of the Interior Mission As the Nation's principal conservation agency, the Department of the Interior has responsibility for most of our nationally owned public lands and natural resources. This includes fostering sound use of our land and water resources; protecting our fish, wildlife, and biological diversity; preserving the environmental and cultural values of our national parks and historical places; and providing for the enjoyment of life through outdoor recreation. The Department assesses our energy and mineral resources and works to ensure that their development is in the best interests of all our people by encouraging stewardship and citizen participation in their care. The Department also has a major responsibility for American Indian reservation communities and for people who live in island territories under U.S. administration. The Minerals Management Service Mission As a bureau of the Department of the Interior, the Minerals Management Service's (MMS) primary responsibilities are to manage the mineral resources located on the Nation's Outer Continental Shelf (OCS), collect revenue from the Federal OCS and onshore Federal and Indian lands, and distribute those revenues. Moreover, in working to meet its responsibilities, the Offshore Minerals Management Program administers the OCS competitive leasing program and oversees the safe and environmentally sound exploration and production of our Nation's offshore natural gas, oil and other mineral resources. The MMS Minerals Revenue Management meets its responsibilities by ensuring the efficient, timely and accurate collection and disbursement of revenue from mineral leasing and production due to Indian tribes and allottees, States and the U.S. Treasury. The MMS strives to fulfill its responsibilities through the general guiding principles of: (1) being responsive to the public's concerns and interests by maintaining a dialogue with all potentially affected parties and (2) carrying out its programs with an emphasis on working to enhance the quality of life for all Americans by lending MMS assistance and expertise to economic development and environmental protection.